Assured Guaranty (AGO) risk factors, FY2024 10-K

Risks Related to Economic, Market and Political Conditions and Natural Phenomena

1. 01Developments in the global financial markets, political systems and the economy generally may adversely affect the Company’s financial condition, results of operations, capital, liquidity, business prospects and share price
2. 02Some of the public finance obligors that have issued obligations insured or reinsured by the Company are experiencing significant budget, pension and revenue shortfalls, and difficulties in obtaining additional financing
3. 03The Company may be subjected to significant risks from large individual or correlated insurance exposures
4. 04Losses on obligations insured by the Company significantly in excess of those expected by the Company or recoveries significantly below those expected by the Company could have a negative effect on the Company’s financial condition, results of operations, capital, business prospects and share price
5. 05Changes in attitudes toward debt repayment could negatively impact the Company’s insurance portfolio
6. 06Narrow credit spreads could adversely affect demand for financial guaranty insurance
7. 07Credit losses and changes in interest rates could adversely affect the Company’s investments
8. 08Global climate change may adversely impact the Company’s insurance portfolio and investments

Risks Related to Estimates, Assumptions and Valuations

1. 09Estimates of expected insurance losses to be paid (recovered), including losses with respect to related legal proceedings, are subject to uncertainties and actual amounts may be different, causing the Company to reserve either too little or too much for future losses
2. 10See Part II, Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), and Note 17, Contingencies, for additional information

Strategic Risks

1. 11Competition in the Company’s industries may adversely affect its results of operations, business prospects and share price
2. 12Strategic transactions may not result in the benefits anticipated
3. 13The Company’s investments in Sound Point are subject to the risks of Sound Point’s business that may adversely affect the Company’s financial condition, results of operations, capital, business prospects and share price
4. 14The Company’s interest in Sound Point is subject to the risks normally associated with a minority interest
5. 15Alternative investments, including allocations of investments to Sound Point and the exclusivity arrangement with Sound Point, may not result in the benefits anticipated, and may expose it to increased credit, interest rate, liquidity, reputational and other risks
6. 16A downgrade of the financial strength or financial enhancement ratings of any of the Company’s insurance or reinsurance subsidiaries may adversely affect its business prospects
7. 17The Company periodically assesses the value of each rating assigned to each of its companies and may, as a result of such assessment, request that a rating agency add or drop a rating from certain of its subsidiaries. For example, a Moody’s rating was dropped from AG Re and AGRO in 2015

Operational Risks

1. 18Fluctuations in foreign exchange rates may adversely affect the Company’s financial position and results of operations
2. 19The Company’s underwriting of insurance in non-U.S. markets and/or covering new sectors or classes of business may expose it to less predictable political, credit and legal risks
3. 20The Company is dependent on members of senior management and other key employees and the loss of any of these individuals, or the delay or inability to develop or recruit suitable replacements, could adversely affect its business
4. 21Evolving cybersecurity, privacy and data security regulations could adversely affect the Company’s business
5. 22Errors in, overreliance on or misuse of models may result in financial loss, reputational harm or adverse regulatory action
6. 23Significant claim payments may reduce the Company’s liquidity
7. 24Large insurance losses could increase substantially the Company’s insurance subsidiaries’ leverage ratios, which may prevent them from writing new insurance
8. 25The Company’s holding companies’ ability to meet their obligations may be constrained
9. 26The ability of AGL and its subsidiaries to meet their liquidity needs may be limited

Risks Related to Taxation

1. 27Changes in U.S. tax laws could reduce the demand or profitability of financial guaranty insurance, or negatively impact the Company’s investments
2. 28AGL may, and AG Re and AGRO will, become subject to taxes in Bermuda, which may adversely affect the Company’s future results of operations and an investment in the Company
3. 29U.S. tax-exempt shareholders may be subject to the unrelated business taxable income rules with respect to certain insurance income of the Foreign Insurance Subsidiaries
4. 30Changes in U.S. federal income tax law may adversely affect the Company and an investment in AGL’s common shares
5. 31An ownership change under Section 382 of the Code could have adverse U.S. federal tax consequences
6. 32An adverse adjustment under U.K. transfer pricing legislation or the imposition of diverted profits tax could adversely impact Assured Guaranty’s tax liability
7. 33On October 8, 2021, nearly 140 countries agreed to the OECD’s proposed Two Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy

Risks Related to Applicable Law, Litigation and GAAP

1. 34Changes in or inability to comply with applicable laws and regulations could adversely affect the Company’s financial condition, results of operations, capital, liquidity, business prospects and share price
2. 35Changes in applicable laws or regulations may adversely impact the ability of issuers to satisfy obligations insured or reinsured by the Company
3. 36Legislation, regulation, determinations made by legal or regulatory authorities, or litigation arising out of the struggles of distressed obligors may adversely impact obligations insured or reinsured by the Company, the Company’s legal rights as creditor and its investments
4. 37AGL’s ability to pay dividends and fund share repurchases and other activities may be constrained by certain insurance regulatory requirements and restrictions
5. 38Applicable insurance laws may make it difficult to effect a change of control of AGL
6. 39An inability to obtain accurate and timely financial information from Sound Point or other alternative investment managers may impair the Company’s ability to comply with reporting obligations under federal securities law
7. 40Change in industry and other accounting practices could adversely affect the Company’s financial condition, results of operations, business prospects and share price

Risks Related to AGL’s Common Shares

1. 41The market price of AGL’s common shares may be volatile, and the value of an investment in the Company may decline
2. 42Provisions in the Code and AGL’s Bye-Laws may reduce the voting rights of its common shares
3. 43reducing the votes of certain shareholders who would not otherwise be subject to the limitation by virtue of their direct share ownership
4. 44Provisions in AGL’s Bye-Laws may restrict the ability to transfer common shares, and may require shareholders to sell their common shares