Assured Guaranty Ltd. (NYSE:AGO) Q1 2023 Earnings Conference Call May 10, 2023 8:00 AM ET Company Participants Robert Tucker - Senior Managing Director, IR & Corporate Communications Dominic Frederico - President & CEO Robert Bailenson - CFO Conference Call Participants Tommy McJoynt - KBW Giuliano Bologna - Compass Point Jordan Hymowitz - Philadelphia Financial Brian Meredith - UBS Operator Good morning, everyone, and welcome to the Assured Guaranty Ltd. First Quarter 2023 Earnings Conference Call. My name ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________ FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition Period from to Commission File No. 001-32141 ASSURED GUARANTY LTD. (Exact name of registrant ...

Assured Guaranty Ltd. (NYSE:AGO) Q4 2022 Earnings Conference Call March 1, 2023 8:00 AM ET Company Participants Robert Tucker - Senior Managing Director, IR & Corporate Communications Dominic Frederico - President & CEO Robert Bailenson - CFO Conference Call Participants Geoffrey Dunn - Dowling & Partners Brian Meredith - UBS Tommy McJoynt - KBW Giuliano Bologna - Compass Point Operator Good morning, and welcome to the Assured Guaranty Ltd. Fourth Quarter and Full Year 2022 Earnings Conference Call. My name ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Assured Guaranty Ltd. operates through two primary segments: Insurance and Asset Management, focusing on credit protection and investment advisory services - The company operates in two distinct segments: Insurance and Asset Management, alongside a Corporate division[25](index=25&type=chunk) - Key business strategies are centered on three areas: (1) insurance growth and loss mitigation, (2) asset management and alternative investments, and (3) capital management[26](index=26&type=chunk) [Insurance](index=7&type=section&id=Insurance) The Insurance segment, the company's largest business line, offers financial guaranty insurance for U.S. and non-U.S. public and structured finance markets - The company's primary insurance operating subsidiaries are **Assured Guaranty Municipal Corp. (AGM)**, **Assured Guaranty Corp. (AGC)**, **Assured Guaranty UK Limited (AGUK)**, and **Assured Guaranty (Europe) SA (AGE)**[27](index=27&type=chunk)[33](index=33&type=chunk) - U.S. insurance subsidiaries (AGM and AGC) provide support to European subsidiaries (AGUK and AGE) through reinsurance, co-guarantee structures, and net worth maintenance agreements to ensure capital adequacy[28](index=28&type=chunk)[29](index=29&type=chunk)[37](index=37&type=chunk) - The company insures a wide range of U.S. public finance obligations, including General Obligation Bonds, Tax-Backed Bonds, Municipal Utility Bonds, and Infrastructure Bonds[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - The structured finance portfolio includes Residential Mortgage-Backed Securities (RMBS), Pooled Corporate Obligations, and Consumer Receivables Securities, with no new primary market RMBS insured since 2008[68](index=68&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Asset Management](index=18&type=section&id=Asset%20Management) The Asset Management segment, significantly expanded by the BlueMountain acquisition, diversifies revenues through a fee-based platform managing CLOs and opportunity funds - The Asset Management segment was established through the acquisition of BlueMountain Capital Management on October 1, 2019, for **$157 million**, diversifying the company's revenues into a fee-based platform[116](index=116&type=chunk) - The U.S. Insurance Subsidiaries are authorized to invest up to **$750 million** in funds managed by AssuredIM, enhancing returns and facilitating the growth of AssuredIM's CLO, asset-based, and healthcare funds[120](index=120&type=chunk) Assets Under Management (AUM) - CLOs | Metric | Value | | :--- | :--- | | AUM in CLOs | $15.2 billion (as of Dec 31, 2022) | | Global Manager Ranking | Top 25 by AUM | - Asset Management revenues are primarily composed of management fees based on a percentage of AUM and performance-based fees, which are subject to hurdles and market conditions[132](index=132&type=chunk)[137](index=137&type=chunk) [Investment Portfolio](index=21&type=section&id=Investment%20Portfolio) The company's investment portfolio, primarily fixed-maturity securities, serves as a key cash flow source, managed for liquidity, income, and high ratings Investment Portfolio Composition (as of Dec 31, 2022) | Category | Fair Value (USD) | % of Portfolio | | :--- | :--- | :--- | | Total Investments | $8.4 billion | 100% | | Externally Managed | $5.6 billion | 67% | | Puerto Rico New Recovery Bonds & CVIs | $661 million | 7.9% | | Loss Mitigation Securities | $508 million | 6.1% | | Managed by AssuredIM (IMA) | $537 million | 6.0% | - As a result of the 2022 Puerto Rico Resolutions, the company received substantial amounts of cash, New Recovery Bonds, and Contingent Value Instruments (CVIs)[145](index=145&type=chunk) - The Insurance segment has authorized up to **$750 million** to be invested in AssuredIM Funds, with a fair value of **$569 million** as of December 31, 2022, consolidated as assets of consolidated investment vehicles (CIVs)[151](index=151&type=chunk)[152](index=152&type=chunk) [Risk Management](index=23&type=section&id=Risk%20Management) The company employs an enterprise-wide risk management framework, overseen by the Board and committees, covering credit, market, liquidity, and operational risks - The Board of Directors has ultimate oversight of risk management, with specific responsibilities delegated to committees like the Risk Oversight, Audit, and Finance Committees[154](index=154&type=chunk)[155](index=155&type=chunk) - Surveillance personnel monitor each risk in the insured portfolio, assigning and updating internal credit ratings and recommending remedial actions to management to mitigate potential losses[165](index=165&type=chunk) - The company has integrated climate change risk into its underwriting, surveillance, and investment processes, evaluating obligors' vulnerability to climate-related perils and resilience factors[173](index=173&type=chunk)[174](index=174&type=chunk) - To manage cybersecurity risks, the company utilizes tools like firewalls, anti-malware, multifactor authentication, and conducts penetration tests, also establishing policies for data protection to comply with regulations like GDPR[171](index=171&type=chunk)[172](index=172&type=chunk) [Regulation](index=29&type=section&id=Regulation) The company's global operations are extensively regulated in the U.S., Bermuda, the U.K., and France, impacting dividends, capital, and risk limits - U.S. insurance subsidiaries (AGM in New York, AGC in Maryland) are subject to state regulations that limit dividend payments without prior regulatory approval, with **AGM able to pay up to $209 million** and **AGC up to $102 million** in 2023 without approval[192](index=192&type=chunk)[193](index=193&type=chunk)[773](index=773&type=chunk) - State insurance laws establish single risk limits, typically capping insured average annual debt service for a single municipal risk at **10% of the insurer's policyholders' surplus and contingency reserves**[198](index=198&type=chunk) - Bermuda-based reinsurers AG Re and AGRO are regulated by the Bermuda Monetary Authority, which imposes minimum solvency margins, enhanced capital requirements, and restrictions on dividend payments[213](index=213&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - European subsidiaries AGUK (U.K.) and AGE (France) are regulated under the Solvency II framework, which sets rules on capital adequacy, governance, risk management, and reporting[231](index=231&type=chunk)[241](index=241&type=chunk) [Human Capital Management](index=38&type=section&id=Human%20Capital%20Management) The company focuses on attracting, retaining, and developing a diverse workforce through competitive compensation, professional development, and an inclusive culture Workforce Statistics (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Total Employees | 411 | | Female Workforce | 36% | | Male Workforce | 64% | | Average Tenure | 11.9 years | - The company's compensation program includes base salary, annual cash incentives, and deferred compensation (cash and/or equity) to attract and motivate talent[258](index=258&type=chunk) - Diversity and inclusion initiatives are supported by an employee-led committee, Employee Resource Groups (ERGs), bias awareness training, and inclusive recruiting strategies[261](index=261&type=chunk)[263](index=263&type=chunk)[265](index=265&type=chunk) - In response to COVID-19, the company has adopted a hybrid work model, offering employees the option to work remotely for a portion of their time[269](index=269&type=chunk) [Tax Matters](index=41&type=section&id=Tax%20Matters) The company's complex global tax structure involves U.K. tax residency, Bermuda tax exemption, U.S. corporate tax, and potential U.S. shareholder implications - AGL became tax resident in the U.K. in November 2013, making it subject to U.K. corporation tax on worldwide profits but also providing access to the U.K.'s tax treaty benefits[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - Under current Bermuda law, AGL and its Bermuda subsidiaries are not subject to income or profits tax and have received an assurance this will remain the case until March 31, 2035[273](index=273&type=chunk) - The company believes that due to dispersed share ownership, no U.S. person should be treated as a **10% U.S. Shareholder**, mitigating the risk of AGL or its non-U.S. subsidiaries being classified as a Controlled Foreign Corporation (CFC)[294](index=294&type=chunk) - The company intends to operate in a manner to qualify for exceptions to the Related Person Insurance Income (RPII) rules, which could otherwise require U.S. shareholders to include a share of certain insurance income in their gross income[297](index=297&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including economic volatility, credit spread changes, Puerto Rico exposure, competition, cybersecurity threats, and complex tax regulations - Economic risks include adverse developments in global financial markets, budget deficits of governments the company insures, and significant losses from large or correlated exposures like Puerto Rico[343](index=343&type=chunk)[344](index=344&type=chunk) - Strategic risks involve intense competition, the possibility that strategic transactions do not result in anticipated benefits, and the risk of a downgrade of the insurance subsidiaries' financial strength ratings[345](index=345&type=chunk)[380](index=380&type=chunk)[383](index=383&type=chunk) - Operational risks include cybersecurity attacks, the loss of key executives, potential liquidity shortages to meet significant claim payments, and the inability to raise additional capital on favorable terms if needed[345](index=345&type=chunk)[398](index=398&type=chunk)[400](index=400&type=chunk) - Taxation risks are substantial, including potential changes in U.S. tax laws, the possibility of non-U.S. subsidiaries being subject to U.S. tax, and adverse tax consequences for U.S. shareholders under CFC, RPII, or PFIC rules[346](index=346&type=chunk)[417](index=417&type=chunk)[424](index=424&type=chunk) [Properties](index=70&type=section&id=Item%202.%20Properties) The company leases office space in Hamilton, Bermuda (principal executive offices), New York (U.S. operations), London, and Paris, which are deemed adequate for its needs - The company's principal executive offices are located in Hamilton, Bermuda, with a lease expiring in April 2026[465](index=465&type=chunk) - Primary offices for U.S. Insurance Subsidiaries and AssuredIM are in New York, with leases expiring in 2032[465](index=465&type=chunk)[470](index=470&type=chunk) [Legal Proceedings](index=71&type=section&id=Item%203.%20Legal%20Proceedings) Details on the company's legal proceedings are incorporated by reference from specific notes within the consolidated financial statements in Part II, Item 8 - Details on legal proceedings are incorporated by reference from Notes 3, 4, and 18 of the Consolidated Financial Statements[466](index=466&type=chunk) [Information About Our Executive Officers](index=71&type=section&id=Information%20About%20Our%20Executive%20Officers) This section provides biographical information for Assured Guaranty Ltd.'s executive officers, including their names, ages, positions, and business experience - Dominic J. Frederico has served as President and Chief Executive Officer of AGL since December 2003[469](index=469&type=chunk) - Robert A. Bailenson has been the Chief Financial Officer of AGL since June 2011 and has been with the company or its predecessors since 1990[470](index=470&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=73&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Assured Guaranty Ltd.'s common shares trade on the NYSE, supported by an active share repurchase program and quarterly cash dividends 2022 Share Repurchase Summary | Metric | Value | | :--- | :--- | | Total Shares Repurchased | 8,847,981 | | Total Cost | ~$503 million | | Average Price per Share | $56.79 | - As of February 28, 2023, the company had **$201 million** remaining under its share repurchase authorization, which has no expiration date[481](index=481&type=chunk) - The company paid quarterly cash dividends of **$0.25 per common share** in 2022[479](index=479&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=75&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results, analyzing segment performance, key strategies, and liquidity [Overview](index=75&type=section&id=Overview) The company's business, comprising Insurance and Asset Management, navigated a 2022 economic environment marked by rising inflation and interest rates, impacting its strategies - The economic environment in 2022 saw a **2.1% increase in real GDP**, a **3.5% unemployment rate**, and a **6.5% inflation rate (CPI-U)** for the 12 months ending December 2022[491](index=491&type=chunk)[492](index=492&type=chunk) - The Federal Reserve raised the federal funds rate seven times in 2022, from near zero to a range of **4.25%-4.50%**, to combat inflation[493](index=493&type=chunk)[494](index=494&type=chunk) - The company's key strategies are to grow the insurance business, expand asset management and alternative investments, and efficiently manage capital, including significant share repurchases[497](index=497&type=chunk) - From 2013 through February 28, 2023, the company repurchased **141 million common shares** for approximately **$4.7 billion**, representing about **73% of the shares outstanding** at the start of the program[524](index=524&type=chunk) [Financial Performance of Assured Guaranty](index=81&type=section&id=Financial%20Performance%20of%20Assured%20Guaranty) Assured Guaranty reported a decrease in 2022 net income to $124 million, primarily due to loss expenses and investment losses, despite an increase in adjusted book value per share Financial Results Summary (GAAP) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net income attributable to AGL | $124 million | $389 million | | Net income per diluted share | $1.92 | $5.23 | Financial Results Summary (Non-GAAP) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Adjusted operating income | $267 million | $470 million | | Adjusted operating income per diluted share | $4.14 | $6.32 | - The decrease in 2022 net income was primarily driven by loss and LAE expense, losses on equity method investments, and higher foreign exchange remeasurement losses compared to 2021[538](index=538&type=chunk)[539](index=539&type=chunk) Book Value Metrics Per Share | Metric | As of Dec 31, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Shareholders' equity per share | $85.80 | $93.19 | | Adjusted operating shareholders' equity per share | $93.92 | $88.73 | | Adjusted book value per share | $141.98 | $130.67 | [Results of Operations by Segment](index=87&type=section&id=Results%20of%20Operations%20by%20Segment) The company's segment performance shows a decrease in Insurance segment income due to investment losses, a narrowed Asset Management loss from higher fees, and a reduced Corporate loss due to non-recurring debt extinguishment Adjusted Operating Income by Segment | Segment | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Insurance | $413 | $722 | | Asset Management | $(6) | $(19) | | Corporate | $(134) | $(263) | | Other | $(6) | $30 | | **Total** | **$267** | **$470** | [Insurance Segment](index=88&type=section&id=Insurance%20Segment) The Insurance segment's adjusted operating income declined to $413 million in 2022, primarily due to alternative investment losses and a shift from loss benefit to expense Insurance Segment Adjusted Operating Income | Year | Adjusted Operating Income (in millions) | | :--- | :--- | | 2022 | $413 | | 2021 | $722 | - Net earned premiums and credit derivative revenues increased to **$508 million** in 2022 from **$438 million** in 2021, primarily due to **$133 million** in premium accelerations related to the 2022 Puerto Rico resolutions[579](index=579&type=chunk)[580](index=580&type=chunk) New Business Production (PVP) | Year | PVP (in millions) | | :--- | :--- | | 2022 | $375 | | 2021 | $361 | - The segment experienced a **$51 million loss** from equity in earnings of investees in 2022, compared to a **$144 million gain** in 2021, mainly due to mark-to-market losses in a private equity fund and the dilutive impact of a healthcare fund's subsequent close[593](index=593&type=chunk)[595](index=595&type=chunk) - Net economic loss development was a benefit of **$125 million** in 2022, primarily from a **$143 million benefit** in U.S. RMBS due to improved transaction performance and higher recoveries[599](index=599&type=chunk)[605](index=605&type=chunk) [Asset Management Segment](index=96&type=section&id=Asset%20Management%20Segment) The Asset Management segment's adjusted operating loss narrowed to $6 million in 2022, driven by increased performance and management fees, with stable total AUM Asset Management Segment Adjusted Operating Income (Loss) | Year | Adjusted Operating Loss (in millions) | | :--- | :--- | | 2022 | $(6) | | 2021 | $(19) | Asset Management Fee Revenue | Fee Type | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Management Fees | $85 | $76 | | Performance Fees | $21 | $1 | Assets Under Management (AUM) | Date | Total AUM (in billions) | | :--- | :--- | | Dec 31, 2022 | $17.5 | | Dec 31, 2021 | $17.5 | - Goodwill and finite-lived intangible assets associated with the BlueMountain acquisition had a carrying value of **$117 million** and **$40 million**, respectively, as of December 31, 2022, with no impairments recorded to date[630](index=630&type=chunk) [Corporate Division](index=99&type=section&id=Corporate%20Division) The Corporate division's adjusted operating loss significantly narrowed to $134 million in 2022, primarily due to the non-recurrence of a large debt extinguishment loss from 2021 Corporate Division Adjusted Operating Income (Loss) | Year | Adjusted Operating Loss (in millions) | | :--- | :--- | | 2022 | $(134) | | 2021 | $(263) | - The 2021 loss included a **$175 million pre-tax ($138 million after-tax) loss** on extinguishment of debt related to the redemption of AGMH and AGUS debt, which did not recur in 2022[647](index=647&type=chunk)[648](index=648&type=chunk) [Non-GAAP Financial Measures](index=104&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted Operating Income, Adjusted Book Value, and PVP to provide clearer insight into performance by excluding volatile, non-economic items - Adjusted Operating Income excludes items like realized gains/losses on investments, non-credit impairment-related unrealized fair value changes on credit derivatives, and foreign exchange remeasurement gains/losses[683](index=683&type=chunk) - Adjusted Book Value is a key metric used by management to measure the intrinsic value of the company, adjusting shareholders' equity for unrealized gains/losses and adding the value of the in-force insurance portfolio, net of expected losses[685](index=685&type=chunk) - Present Value of New Business Production (PVP) is used to evaluate the value of new insurance business, including the present value of estimated future installment premiums, which is not fully captured by GAAP GWP[692](index=692&type=chunk) [Insured Portfolio](index=107&type=section&id=Insured%20Portfolio) As of December 31, 2022, the financial guaranty portfolio's net par outstanding was $233.3 billion, predominantly public finance, with significantly reduced Puerto Rico exposure Financial Guaranty Portfolio Net Par Outstanding | Date | Total Net Par Outstanding | | :--- | :--- | | Dec 31, 2022 | $233.3 billion | | Dec 31, 2021 | $236.4 billion | Portfolio Composition by Sector (Net Par, Dec 31, 2022) | Sector | Net Par Outstanding | | :--- | :--- | | Public Finance | $224.1 billion | | Structured Finance | $9.2 billion | - Net par exposure to Puerto Rico decreased from **$3.6 billion** at year-end 2021 to **$1.4 billion** as of December 31, 2022, following the consummation of the 2022 Puerto Rico Resolutions[1007](index=1007&type=chunk)[1011](index=1011&type=chunk) - The ten largest U.S. public finance exposures by revenue source represent **8.8% of the total U.S. public finance net par outstanding**, with the State of New Jersey being the largest at **$3.1 billion**[708](index=708&type=chunk) [Liquidity and Capital Resources](index=113&type=section&id=Liquidity%20and%20Capital%20Resources) The company manages liquidity at both holding company and operating subsidiary levels, relying on dividends and maintaining liquid assets to meet obligations - Holding company liquidity is primarily dependent on dividends from operating subsidiaries, which are subject to regulatory limits[735](index=735&type=chunk) U.S. Holding Company Long-Term Debt (Principal) | Company | Dec 31, 2022 (in millions) | | :--- | :--- | | AGUS | $1,580 | | AGMH | $300 | | **Total** | **$1,880** (before intercompany eliminations) | - Insurance subsidiaries target a liquid asset balance of **1.5 times their projected net cash flow needs** over the next four quarters[761](index=761&type=chunk) - The company's consolidated cash flow summary shows a net cash outflow from operating activities of **$2,479 million** in 2022, largely driven by claim payments related to Puerto Rico resolutions and investment activities within consolidated CIVs[824](index=824&type=chunk)[825](index=825&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=128&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks including credit spread, interest rate, and foreign currency exchange rate risks, with sensitivity analyses provided for their potential impact - The company's primary market risk exposures are interest rate risk, foreign currency exchange rate risk, and credit spread risk[830](index=830&type=chunk) Sensitivity of Credit Derivatives to Credit Spread Changes (Pre-Tax) | Scenario | Estimated Change in Gain/(Loss) (in millions) | | :--- | :--- | | Increase of 25 bps | $(71) | | Decrease of 25 bps | $63 | Sensitivity of Investment Portfolio to Interest Rate Changes (Pre-Tax) | Scenario | Estimated Change in Fair Value (in millions) | | :--- | :--- | | Increase of 100 bps | $(378) | | Decrease of 100 bps | $404 | - As of December 31, 2022, approximately **74% of installment premiums receivable** are denominated in currencies other than the U.S. dollar, creating foreign exchange risk[852](index=852&type=chunk) [Financial Statements and Supplementary Data](index=134&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the fiscal year ended December 31, 2022, and preceding years, along with the independent auditor's report - The section includes the consolidated financial statements as of December 31, 2022 and 2021, and for the three years ended December 31, 2022, audited by PricewaterhouseCoopers LLP[872](index=872&type=chunk)[876](index=876&type=chunk) - The independent auditor's report expresses an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting[877](index=877&type=chunk) - A critical audit matter identified was the valuation of the Loss and Loss Adjustment Expense (LAE) Reserve and the Salvage and Subrogation Recoverable, due to the significant management judgment involved in estimating expected losses[884](index=884&type=chunk)[885](index=885&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=247&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for its upcoming Annual General Meeting - Required information for this item is incorporated by reference from the company's definitive proxy statement[1631](index=1631&type=chunk) [Executive Compensation](index=248&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's definitive proxy statement for its upcoming Annual General Meeting - Required information for this item is incorporated by reference from the company's definitive proxy statement[1634](index=1634&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=248&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership by beneficial owners and management, along with equity compensation plans, is incorporated by reference from the company's definitive proxy statement - Required information for this item is incorporated by reference from the company's definitive proxy statement[1635](index=1635&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=248&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related person transactions and director independence is incorporated by reference from the company's definitive proxy statement for its upcoming Annual General Meeting - Required information for this item is incorporated by reference from the company's definitive proxy statement[1636](index=1636&type=chunk) [Principal Accountant Fees and Services](index=248&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services, including the pre-approval policy, is incorporated by reference from the company's definitive proxy statement - Required information for this item is incorporated by reference from the company's definitive proxy statement[1637](index=1637&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=248&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K report - This section provides a list of all financial statements and exhibits filed with the Form 10-K[1640](index=1640&type=chunk) - Financial statement schedules have been omitted because they are not applicable or the required information is included elsewhere in the report[1642](index=1642&type=chunk)

Assured Guaranty Ltd. (NYSE:AGO) Q3 2022 Earnings Conference Call November 8, 2022 8:00 AM ET Company Participants Robert Tucker - Senior Managing Director, Investor Relations and Corporate Communications Dominic Frederico - President and Chief Executive Officer Rob Bailenson - Chief Financial Officer Conference Call Participants Brian Meredith - UBS Tommy McJoynt - KBW Jackie Cavanaugh - Putnam Geoffrey Dunn - Dowling & Partners Giuliano Bologna - Compass Point Operator Good morning, and welcome to the Ass ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________ FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition Period from to Commission File No. 001-32141 ASSURED GUARANTY LTD. (Exact name of regist ...

Assured Guaranty Ltd. (NYSE:AGO) Q2 2022 Earnings Conference Call August 4, 2022 8:00 AM ET Company Participants Robert Tucker - Senior Managing Director, Investor Relations and Corporate Communications Dominic Frederico - President and Chief Executive Officer Rob Bailenson - Chief Financial Officer Conference Call Participants Geoffrey Dunn - Dowling & Partners Operator Good morning, and welcome to the Assured Guaranty Ltd. Second Quarter 2022 Earnings Conference Call. My name is Danielle and I will be the ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________ FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition Period from to Commission File No. 001-32141 ASSURED GUARANTY LTD. (Exact name of registrant ...

Assured Guaranty Ltd. (NYSE:AGO) Q1 2022 Earnings Conference Call May 6, 2022 8:00 AM ET Company Participants Robert Tucker - Senior Managing Director, Investor Relations and Corporate Communications Dominic Frederico - President & Chief Executive Officer Robert Bailenson - Chief Financial Officer Conference Call Participants Jordan Hymowitz - Philadelphia Financial Geoffrey Dunn - Dowling & Partners Thomas McJoynt-Griffith - KBW Operator Good morning, and welcome to the Assured Guaranty Limited First Quart ...

PART I Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Assured Guaranty Ltd.'s unaudited condensed consolidated financial statements for Q1 2022 and 2021, covering Balance Sheets, Statements of Operations, and Cash Flows, with detailed notes [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Total assets decreased to **$17.85 billion** by March 31, 2022, while Q1 2022 net income attributable to AGL significantly increased to **$66 million** Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$17,845** | **$18,208** | | Total Investments | $9,067 | $9,608 | | **Total Liabilities** | **$11,829** | **$11,708** | | Long-term debt | $1,673 | $1,673 | | **Total Shareholders' Equity** | **$5,995** | **$6,478** | Condensed Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Total Revenues** | **$300** | **$177** | | Net Earned Premiums | $214 | $103 | | **Total Expenses** | **$196** | **$171** | | **Net Income Attributable to AGL** | **$66** | **$11** | | **Basic EPS** | **$1.00** | **$0.14** | - The company experienced a comprehensive loss attributable to Assured Guaranty Ltd. of **$312 million** in Q1 2022, primarily due to **$377 million** in net unrealized losses on investments[13](index=13&type=chunk) - In Q1 2022, the company repurchased **2,738,223 common shares** for **$155 million** and paid **$17 million** in dividends, compared to **1,986,534 shares** for **$77 million** in Q1 2021[17](index=17&type=chunk)[18](index=18&type=chunk) [Note 1: Business and Basis of Presentation](index=10&type=section&id=1.%20Business%20and%20Basis%20of%20Presentation) Assured Guaranty Ltd. provides credit protection for public and structured finance markets, and asset management services as a Bermuda-based holding company - The company operates in two main business areas: providing credit protection products (financial guaranty insurance) and asset management services[27](index=27&type=chunk) - The asset management business, AssuredIM, was significantly expanded through the acquisition of BlueMountain Capital Management in October **2019** and serves as an investment advisor for CLOs, opportunity funds, and liquid strategy funds[29](index=29&type=chunk) - On April 1, **2021**, Municipal Assurance Corp. (MAC) was merged into Assured Guaranty Municipal Corp. (AGM), resulting in a **$16 million** write-off of MAC's insurance licenses in Q1 **2021**[34](index=34&type=chunk) [Note 2: Segment Information](index=12&type=section&id=2.%20Segment%20Information) The company reports in Insurance and Asset Management segments; Insurance adjusted operating income rose to **$133 million** in Q1 2022, while Asset Management broke even Segment Adjusted Operating Income (Loss) (in millions) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Insurance | $133 | $79 | | Asset Management | $0 | $(7) | | **Total Segments** | **$133** | **$72** | - The company's chief operating decision maker assesses performance and allocates resources based on two segments: Insurance and Asset Management[39](index=39&type=chunk) - Segment adjusted operating income is a non-GAAP measure defined as net income attributable to AGL, adjusted for items like realized investment gains/losses, non-credit impairment unrealized fair value changes on credit derivatives, fair value changes on committed capital securities, and foreign exchange remeasurement gains/losses[42](index=42&type=chunk) [Note 3: Outstanding Exposure](index=14&type=section&id=3.%20Outstanding%20Exposure) Total net par outstanding was **$233.4 billion** as of March 31, 2022, with **Puerto Rico** exposure significantly reduced to **$2.2 billion** due to restructuring Financial Guaranty Portfolio - Net Par Outstanding (in millions) | Category | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Public finance | $224,463 | $227,164 | | Structured finance | $8,916 | $9,228 | | **Total financial guaranty** | **$233,379** | **$236,392** | Components of BIG Net Par Outstanding (in millions) | Category | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Public finance | $4,295 | $5,972 | | Structured finance | $1,344 | $1,384 | | **Total BIG** | **$5,639** | **$7,356** | - The company's net par exposure to Puerto Rico decreased by **$1.3 billion**, from **$3.57 billion** at year-end **2021** to **$2.24 billion** as of March 31, **2022**, due to the consummation of the GO/PBA Plan and other resolutions[86](index=86&type=chunk)[89](index=89&type=chunk)[114](index=114&type=chunk) [Note 4: Expected Loss to be Paid (Recovered)](index=26&type=section&id=4.%20Expected%20Loss%20to%20be%20Paid%20(Recovered)) Net expected loss to be paid increased to **$432 million** by March 31, 2022, with a **$44 million** economic loss development benefit, offset by **$65 million** in net paid losses Net Expected Loss to be Paid (Recovered) Roll Forward (in millions) | Description | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Beginning of period | $411 | $529 | | Total economic loss development (benefit) | $(44) | $13 | | Net (paid) recovered losses | $65 | $(70) | | **End of period** | **$432** | **$472** | - The economic benefit for U.S. public finance transactions was **$48 million** in Q1 2022, mainly due to favorable resolutions and assumption updates for **Puerto Rico** exposures, as well as changes in discount rates, reducing the total net expected loss for this sector to **$181 million**[143](index=143&type=chunk) - For U.S. RMBS, there was an economic loss development of **$7 million** in Q1 2022, primarily driven by lower excess spread, partially offset by benefits from changes in discount rates and improved transaction performance[487](index=487&type=chunk) [Note 5: Contracts Accounted for as Insurance](index=35&type=section&id=5.%20Contracts%20Accounted%20for%20as%20Insurance) Net earned premiums more than doubled to **$214 million** in Q1 2022, driven by **$128 million** in accelerations, including **Puerto Rico** resolutions Net Earned Premiums (in millions) | Component | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Scheduled net earned premiums | $79 | $81 | | Accelerations from refundings and terminations | $128 | $16 | | Accretion of discount | $6 | $5 | | Specialty net earned premiums | $1 | $1 | | **Total Net Earned Premiums** | **$214** | **$103** | - The significant increase in accelerated net earned premiums in Q1 2022 was primarily due to **$104 million** related to the March **Puerto Rico** Resolutions[175](index=175&type=chunk) Net Loss and LAE Reserve (Salvage) by Sector (in millions) | Sector | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Public finance | $128 | $61 | | Structured finance | $60 | $18 | | **Total** | **$188** | **$79** | [Note 6: Contracts Accounted for as Credit Derivatives](index=40&type=section&id=6.%20Contracts%20Accounted%20for%20as%20Credit%20Derivatives) Credit derivative net par outstanding was **$3.57 billion** as of March 31, 2022, with a Q1 2022 fair value loss of **$3 million**, a significant improvement from prior year Credit Derivative Net Par Outstanding (in millions) | Sector | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | U.S. public finance | $1,487 | $1,705 | | Non-U.S. public finance | $1,586 | $1,800 | | U.S. structured finance | $370 | $400 | | Non-U.S. structured finance | $131 | $135 | | **Total** | **$3,574** | **$4,040** | - The company recorded a fair value loss of **$3 million** on credit derivatives in Q1 2022, compared to a **$19 million** loss in Q1 2021, driven by wider credit spreads on underlying obligations, partially offset by the increased cost to buy protection on AGC[205](index=205&type=chunk) [Note 7: Investments](index=42&type=section&id=7.%20Investments) The total investment portfolio decreased to **$9.07 billion** by March 31, 2022, with net investment income at **$62 million** in Q1 2022, and net realized gains of **$3 million** Investment Portfolio Composition (in millions) | Investment Type | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Fixed-maturity securities, available-for-sale | $8,156 | $8,202 | | Fixed-maturity securities, trading | $174 | $0 | | Short-term investments | $585 | $1,225 | | Other invested assets | $152 | $181 | | **Total Investments** | **$9,067** | **$9,608** | - The company received new recovery bonds (classified as available-for-sale) and contingent value instruments (CVIs, classified as trading) in connection with the March **Puerto Rico** resolutions[214](index=214&type=chunk) - Net investment income decreased to **$62 million** in Q1 2022 from **$70 million** in Q1 2021, with equity in earnings of investees swinging to a loss of **$11 million** from a gain of **$9 million** in the prior-year period[233](index=233&type=chunk) [Note 8: Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles](index=48&type=section&id=8.%20Financial%20Guaranty%20Variable%20Interest%20Entities%20and%20Consolidated%20Investment%20Vehicles) The company consolidates FG VIEs and CIVs; FG VIE assets were **$307 million** and CIV assets were **$5.7 billion** as of March 31, 2022, including new **Puerto Rico** trusts - In Q1 2022, the company began consolidating nine custodial trusts (**Puerto Rico** Trusts) established as part of the GO/PBA Plan, as it is deemed the primary beneficiary with the power to collapse these trusts[244](index=244&type=chunk) Consolidated VIE and CIV Balances (in millions) | Category | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **FG VIEs' Assets** | **$307** | **$260** | | **FG VIEs' Liabilities** | **$335** | **$289** | | **CIVs' Assets** | **$5,700** | **$5,271** | | **CIVs' Liabilities** | **$4,854** | **$4,436** | - The company consolidates **20** CIVs, consisting of **8** funds, **9** CLOs, and **3** CLO warehouses as of March 31, 2022, unchanged from year-end **2021**[255](index=255&type=chunk) [Note 9: Fair Value Measurement](index=54&type=section&id=9.%20Fair%20Value%20Measurement) Total assets at fair value were **$14.76 billion** as of March 31, 2022, with **$1.74 billion** in Level 3, while total liabilities were **$4.49 billion**, with **$4.14 billion** in Level 3 - The company categorizes its fair value measurements into a three-level hierarchy (Level 1, 2, and 3) based on the observability of inputs, with Level 3 instruments relying on significant unobservable inputs and management judgment[275](index=275&type=chunk)[276](index=276&type=chunk) Assets and Liabilities at Fair Value (in millions) - As of March 31, 2022 | Category | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | **$790** | **$12,233** | **$1,736** | **$14,759** | | **Total Liabilities** | **$0** | **$347** | **$4,142** | **$4,489** | - The fair value of credit derivative liabilities is determined using internal models due to the lack of an active market, with key unobservable inputs including the company's own credit spread, collateral credit spreads, and assumptions about non-standard contract terms[289](index=289&type=chunk)[290](index=290&type=chunk) [Note 10: Asset Management Fees](index=68&type=section&id=10.%20Asset%20Management%20Fees) Total asset management fees increased to **$34 million** in Q1 2022, driven by a significant rise in performance fees to **$14 million**, primarily from healthcare and asset-based funds Asset Management Fees (in millions) | Fee Type | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Management fees | $14 | $18 | | Performance fees | $14 | $1 | | Reimbursable fund expenses | $6 | $5 | | **Total asset management fees** | **$34** | **$24** | - The increase in performance fees in Q1 2022 was primarily attributable to the performance of the healthcare and asset-based funds[344](index=344&type=chunk) [Note 11: Credit Facilities](index=69&type=section&id=11.%20Credit%20Facilities) The company established and fully repaid a **$400 million** short-term loan facility in March 2022 to fund **Puerto Rico** exposure payments; the facility has since expired - The company entered into a short-term loan facility in February **2022** to manage liquidity for payments related to the **Puerto Rico** resolution[347](index=347&type=chunk) - A total of **$400 million** was borrowed under the facility on March 14, **2022**, and was fully repaid two days later on March 16, **2022**, with the facility now expired[347](index=347&type=chunk) [Note 12: Income Taxes](index=69&type=section&id=12.%20Income%20Taxes) The company recorded a **$18 million** provision for income taxes in Q1 2022, resulting in a **20.0%** effective tax rate, influenced by geographic income distribution and a **$24 million** valuation allowance Income Tax Provision and Effective Rate | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Pre-tax Income (in millions) | $93 | $15 | | Provision for Income Taxes (in millions) | $18 | $0 | | **Effective Tax Rate** | **20.0%** | **(0.9)%** | - The company's overall effective tax rate is influenced by the mix of income generated in different tax jurisdictions, including the U.S. (**21%**), U.K. (**19%**), France (**25.0%** in **2022**), and tax-exempt Bermuda[355](index=355&type=chunk) - A valuation allowance of **$24 million** is maintained against foreign tax credits that are not expected to be utilized before their expiration in **2027**[351](index=351&type=chunk) [Note 13: Commitments and Contingencies](index=71&type=section&id=13.%20Commitments%20and%20Contingencies) The company faces various lawsuits, including ongoing **Puerto Rico** litigation and a pending decision in a case with **Lehman Brothers International (Europe)** regarding credit derivative terminations - The company is a party to numerous legal actions related to the defaults by **Puerto Rico** and its instrumentalities, which are part of its loss mitigation and recovery efforts[363](index=363&type=chunk) - A long-standing lawsuit with **Lehman Brothers International (Europe)** regarding the termination of CDS contracts is ongoing, with a decision pending following a bench trial held from October to November **2021**[365](index=365&type=chunk)[367](index=367&type=chunk) [Note 14: Shareholders' Equity](index=72&type=section&id=14.%20Shareholders%27%20Equity) Accumulated Other Comprehensive Income (AOCI) decreased to a negative **$78 million** by March 31, 2022, due to unrealized investment losses, while the company repurchased **2.7 million shares** for **$155 million** in Q1 2022 - Accumulated Other Comprehensive Income (AOCI) experienced a negative swing of **$378 million** during Q1 2022, driven primarily by unrealized losses on investments[369](index=369&type=chunk) Share Repurchases (Q1 2022) | Period | Number of Shares Repurchased | Total Payments (in millions) | Average Price Paid Per Share | | :--- | :--- | :--- | :--- | | Jan 1 - Mar 31, 2022 | 2,738,223 | $155 | $56.62 | - On February 23, **2022**, the Board of Directors authorized an additional **$350 million** for share repurchases, with **$240 million** remaining under the authorization as of May 5, **2022**[374](index=374&type=chunk) [Note 15: Earnings Per Share](index=74&type=section&id=15.%20Earnings%20Per%20Share) Basic EPS for Q1 2022 was **$1.00** and Diluted EPS was **$0.98**, a substantial increase from **$0.14** in Q1 2021, based on **$66 million** net income Earnings Per Share (EPS) Calculation | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income Attributable to AGL (millions) | $66 | $11 | | Basic Shares (millions) | 66.3 | 76.7 | | **Basic EPS** | **$1.00** | **$0.14** | | Diluted Shares (millions) | 67.4 | 77.5 | | **Diluted EPS** | **$0.98** | **$0.14** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=75&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 financial condition and operations, covering business overview, economic environment, strategies, and segment performance, with net income increasing to **$66 million** due to **Puerto Rico** resolutions [Overview](index=76&type=section&id=Overview) The company operates in Insurance and Asset Management segments; Q1 2022 saw rising inflation and interest rates, presenting both opportunities and risks, with minimal direct **COVID-19** impact - The company's business is divided into two main segments: providing credit protection (Insurance) and offering investment advisory services (Asset Management)[388](index=388&type=chunk)[390](index=390&type=chunk) - The economic environment in Q1 2022 featured rising inflation and interest rates, potentially increasing demand for insurance products but also reducing fixed-income portfolio value[394](index=394&type=chunk)[397](index=397&type=chunk) - Direct **COVID-19** claims have been minimal, with most reimbursements received, and the company has transitioned to a hybrid work model[401](index=401&type=chunk)[402](index=402&type=chunk) [Key Business Strategies](index=79&type=section&id=Key%20Business%20Strategies) The company's strategy focuses on Insurance, Asset Management, and Capital Management, highlighted by successful **Puerto Rico** exposure resolution and active share repurchases since **2013** - The company's key strategies are centered on growing the insurance business, expanding the asset management segment, and efficiently managing capital[405](index=405&type=chunk) - A major loss mitigation success was the March 15, **2022** resolution of a substantial portion of the company's **Puerto Rico** exposure through the GO/PBA Plan, which greatly reduced the outstanding risk[414](index=414&type=chunk)[417](index=417&type=chunk) - Capital management remains a priority, with the company having repurchased approximately **70%** of its shares outstanding since the program began in **2013**, and the Board authorized an additional **$350 million** for repurchases in February **2022**[425](index=425&type=chunk) [Executive Summary](index=83&type=section&id=Executive%20Summary) Net income attributable to AGL rose to **$66 million** in Q1 2022, driven by higher earned premiums from **Puerto Rico** resolutions, while adjusted book value per share increased to **$133.21** Key Financial Results (in millions, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income Attributable to AGL | $66 | $11 | | Diluted EPS | $0.98 | $0.14 | | Adjusted Operating Income | $90 | $43 | Key Per Share Metrics | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Shareholders' Equity per Share | $89.20 | $93.19 | | Adjusted Operating Shareholders' Equity per Share | $90.09 | $88.73 | | Adjusted Book Value per Share | $133.21 | $130.67 | - The company has no material direct exposure to Ukraine or Russia, with its direct exposure to Eastern Europe limited to **$327 million** in net par outstanding, primarily related to Poland and Hungary[443](index=443&type=chunk) [Results of Operations](index=88&type=section&id=Results%20of%20Operations) The section details segment operational results; Insurance adjusted operating income grew to **$133 million** in Q1 2022, and Asset Management reached breakeven, driven by **Puerto Rico** resolutions and higher performance fees - The company's critical accounting estimates include expected loss to be paid, fair value of certain assets and liabilities (investments, VIEs, derivatives), goodwill recoverability, credit impairment, revenue recognition, and income taxes[1096](index=1096&type=chunk) Segment Adjusted Operating Income (Loss) (in millions) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Insurance | $133 | $79 | | Asset Management | $0 | $(7) | | Corporate | $(33) | $(29) | | Other (VIE/CIV Effect) | $(10) | $0 | | **Total Adjusted Operating Income** | **$90** | **$43** | - The company provides detailed definitions and reconciliations for its non-GAAP financial measures, including Adjusted Operating Income, Adjusted Operating Shareholders' Equity, and Adjusted Book Value, which management uses to evaluate performance and for compensation purposes[529](index=529&type=chunk)[531](index=531&type=chunk)[533](index=533&type=chunk) [Insured Portfolio](index=107&type=section&id=Insured%20Portfolio) Total net par outstanding was **$233.4 billion** as of March 31, 2022, dominated by U.S. public finance, with **Puerto Rico** exposure significantly reduced to **$2.2 billion** Financial Guaranty Portfolio by Sector (Net Par Outstanding, in millions) | Sector | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | U.S. public finance | $175,957 | $177,219 | | Non-U.S. public finance | $48,506 | $49,945 | | U.S. structured finance | $8,101 | $8,374 | | Non-U.S. structured finance | $815 | $854 | | **Total** | **$233,379** | **$236,392** | - The company's insured exposure to **Puerto Rico** was **$2.2 billion** net par outstanding as of March 31, 2022, all of which is rated BIG[554](index=554&type=chunk) - U.S. RMBS exposures represent **1.0%** of the total net par outstanding, with **$1.2 billion** of the **$2.3 billion** total rated as BIG[562](index=562&type=chunk)[563](index=563&type=chunk) [Liquidity and Capital Resources](index=111&type=section&id=Liquidity%20and%20Capital%20Resources) Holding company liquidity relies on subsidiary dividends; Q1 2022 saw a net operating cash outflow of **$892 million**, mainly due to **Puerto Rico** claim payments, with sufficient liquidity for the next twelve months - The liquidity of AGL and its U.S. Holding Companies is primarily dependent on dividends from operating subsidiaries, with key uses including debt service, shareholder dividends, and share repurchases[565](index=565&type=chunk) - Insurance subsidiaries face regulatory restrictions on dividend payments, with estimated maximum ordinary dividend capacities of **$291 million** for AGM and **$207 million** for AGC in **2022**[589](index=589&type=chunk)[590](index=590&type=chunk) Condensed Consolidated Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $(892) | $(466) | | Net cash from investing activities | $850 | $125 | | Net cash from financing activities | $(10) | $389 | | **Increase (decrease) in cash** | **$(53)** | **$48** | [Quantitative and Qualitative Disclosures About Market Risk](index=123&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risk exposures between December 31, 2021, and March 31, 2022 - There were no material changes to the company's market risks since December 31, **2021**[629](index=629&type=chunk) [Controls and Procedures](index=123&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during Q1 2022 - The company's President, CEO, and CFO concluded that disclosure controls and procedures were effective as of March 31, **2022**[631](index=631&type=chunk) - No changes in internal control over financial reporting occurred during Q1 2022 that have materially affected, or are reasonably likely to materially affect, these controls[631](index=631&type=chunk) PART II Other Information [Legal Proceedings](index=124&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings and claims are detailed in the **2021** Annual Report on Form 10-K and Note **13** of this Form 10-Q - Information regarding legal proceedings is detailed in the **2021** Annual Report on Form 10-K and in Note **13** of this Form 10-Q[633](index=633&type=chunk) [Risk Factors](index=124&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the **2021** Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's **2021** Annual Report on Form 10-K[634](index=634&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=124&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company purchased **2,953,237 shares** of its equity for **$57.05 per share** in Q1 2022, with **$240 million** remaining authorized for future repurchases Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31 | 940,333 | $52.80 | | Feb 1 - Feb 28 | 1,051,645 | $57.55 | | Mar 1 - Mar 31 | 961,259 | $60.66 | | **Total** | **2,953,237** | **$57.05** | - As of May 5, **2022**, the company had a remaining authorization to repurchase **$240 million** of its common shares[635](index=635&type=chunk) [Exhibits](index=125&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including executive compensation agreements, indemnification agreements, and CEO/CFO certifications - The report includes exhibits related to executive compensation plans, director agreements, and required CEO/CFO certifications[639](index=639&type=chunk)