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Segment Information | 9 Months Ended
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Sep. 30, 2023
Segment Reporting [Abstract] |
Segment Information | Segment Information The Company reports its results of operations in two segments: Insurance and Asset Management, separate from its Corporate division and the effects of consolidating FG VIEs and CIVs, which is consistent with the manner in which the Company’s chief operating decision maker (CODM) reviews the business to assess performance and allocate resources. The Insurance segment primarily consists of: (i) the Company’s insurance subsidiaries; and (ii) AGAS. Prior to July 1, 2023, the Asset Management segment consisted of AssuredIM, which provided asset management services to third-party investors as well as to the U.S. Insurance Subsidiaries and AGAS. Beginning in July 2023, the Company participates in the asset management business through its investment in Sound Point as described in Note 1, Business and Basis of Presentation. Beginning in third quarter 2023, the Asset Management segment primarily includes the results of the Company’s equity method investment in Sound Point entities, which are reported on a one-quarter lag. The Corporate division primarily consists of interest expense on the debt of the U.S. Holding Companies and any losses on extinguishment or repurchases of their debt, as well as any gains and losses and other operating expenses attributed to the corporate activities of AGL and the U.S. Holding Companies, including the gain associated with the Sound Point Transaction and the AHP Transaction. The Other category primarily includes the effect of consolidating FG VIEs and CIVs, intersegment eliminations and the reclassification of reimbursable fund expenses. See Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles. The segment results differ from the consolidated financial statements in certain respects. The Insurance segment includes: (i) premiums and losses from the financial guaranty insurance policies issued by the U.S. Insurance Subsidiaries which guarantee the FG VIEs’ debt; and (ii) AGAS’ share of earnings from investments in Sound Point and AHP funds in “equity in earnings (losses) of investees.” Under GAAP, (i) FG VIEs are consolidated by the U.S. Insurance Subsidiaries and the premiums and losses/recoveries associated with the financial guaranty policies associated with the FG VIEs’ debt are eliminated (the reconciliation tables below present the FG VIEs and related eliminations in “other”) and (ii) CIVs are consolidated by either AGUS or AGAS (in the reconciliation tables below, the CIVs and related eliminations of the Insurance segment’s “equity in earnings (losses) of investees” associated with AGAS’ ownership interest in CIVs are presented in “other”). Until July 1, 2023, under GAAP, reimbursable fund expenses were shown as a component of asset management fees and included in total revenues, whereas in the Asset Management segment in the tables below these expenses were netted in “segment expenses.” The Company analyzes the operating performance of each segment using “segment adjusted operating income (loss).” Results for each segment include specifically identifiable expenses as well as intersegment expense allocations, as applicable, based on time studies and other cost allocation methodologies based on headcount or other metrics. Segment adjusted operating income is defined as “net income (loss) attributable to AGL,” adjusted for the following items, which primarily affect the Insurance segment and corporate division: •Elimination of realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading. •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. •Elimination of fair value gains (losses) on the Company’s committed capital securities (CCS) that are recognized in net income. •Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and loss adjustment expense (LAE) reserves that are recognized in net income. •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. The Company does not report assets by reportable segment as the CODM does not assess performance and allocate resources based on assets. The following table presents information for the Company’s operating segments. Intersegment revenues include transactions between and among the segments, the corporate division and other. Segment Information
|  | Third Quarter
|  | 2023 |  | 2022
|  | Insurance |  | Asset Management |  | Insurance |  | Asset Management
|  | (in millions)
Third-party revenues |  | $ | 206 |  |  | $ | — |  |  | $ | 145 |  |  | $ | 13 |
Intersegment revenues |  | 2 |  |  | — |  |  | 2 |  |  | 8 |
Segment revenues |  | 208 |  |  | — |  |  | 147 |  |  | 21 |
Segment expenses |  | 165 |  |  | — |  |  | (16) |  |  | 24 |
Segment equity in earnings (losses) of investees |  | 25 |  |  | — |  |  | (11) |  |  | — |
Less: Segment provision (benefit) for income taxes |  | 9 |  |  | — |  |  | (7) |  |  | — |
Segment adjusted operating income (loss) |  | $ | 59 |  |  | $ | — |  |  | $ | 159 |  |  | $ | (3) |
|  | Nine Months
|  | 2023 |  | 2022
|  | Insurance |  | Asset Management |  | Insurance |  | Asset Management
|  | (in millions)
Third-party revenues |  | $ | 615 |  |  | $ | 44 |  |  | $ | 558 |  |  | $ | 59 |
Intersegment revenues |  | 7 |  |  | 27 |  |  | 6 |  |  | 29 |
Segment revenues |  | 622 |  |  | 71 |  |  | 564 |  |  | 88 |
Segment expenses |  | 354 |  |  | 75 |  |  | 147 |  |  | 91 |
Segment equity in earnings (losses) of investees |  | 60 |  |  | — |  |  | (46) |  |  | — |
Less: Segment provision (benefit) for income taxes |  | 46 |  |  | (1) |  |  | 24 |  |  | — |
Segment adjusted operating income (loss) |  | $ | 282 |  |  | $ | (3) |  |  | $ | 347 |  |  | $ | (3) |
The tables below present a reconciliation of significant components of segment information to the comparable consolidated amounts. Reconciliation of Segment Information to Consolidated Information Three Months Ended September 30, 2023
|  |  |  |  | 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 |
Reconciliation of Segment Information to Consolidated Information Three Months Ended September 30, 2022
|  |  |  |  | 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 | $ | 147 |  |  | $ | (16) |  |  | $ | (11) |  |  | $ | (7) |  |  | $ | — |  |  | $ | 159 |
Asset Management | 21 |  |  | 24 |  |  | — |  |  | — |  |  | — |  |  | (3) |
Total segments | 168 |  |  | 8 |  |  | (11) |  |  | (7) |  |  | — |  |  | 156 |
Corporate division | 1 |  |  | 34 |  |  | — |  |  | (3) |  |  | — |  |  | (30) |
Other | 13 |  |  | 2 |  |  | (9) |  |  | 1 |  |  | (6) |  |  | 7 |
Subtotal | 182 |  |  | 44 |  |  | (20) |  |  | (9) |  |  | (6) |  |  | 133 |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |
Realized gains (losses) on investments | (14) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (14) |
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives | (50) |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | (49) |
Fair value gains (losses) on CCS | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves | (78) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (78) |
Tax effect | — |  |  | — |  |  | — |  |  | (18) |  |  | — |  |  | 18 |
Total consolidated | $ | 41 |  |  | $ | 43 |  |  | $ | (20) |  |  | $ | (27) |  |  | $ | (6) |  |  | $ | 11 |
Reconciliation of Segment Information to Consolidated Information Nine Months Ended September 30, 2023
|  |  |  |  | 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 | $ | 622 |  |  | $ | 354 |  |  | $ | 60 |  |  | $ | 46 |  |  | $ | — |  |  | $ | 282 |
Asset Management | 71 |  |  | 75 |  |  | — |  |  | (1) |  |  | — |  |  | (3) |
Total segments | 693 |  |  | 429 |  |  | 60 |  |  | 45 |  |  | — |  |  | 279 |
Corporate division | 263 |  |  | 165 |  |  | — |  |  | 37 |  |  | — |  |  | 61 |
Other | 28 |  |  | 12 |  |  | (35) |  |  | (8) |  |  | 19 |  |  | (30) |
Subtotal | 984 |  |  | 606 |  |  | 25 |  |  | 74 |  |  | 19 |  |  | 310 |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |
Realized gains (losses) on investments | (20) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (20) |
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives | 108 |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | 109 |
Fair value gains (losses) on CCS | (35) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (35) |
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves | 9 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9 |
Tax effect | — |  |  | — |  |  | — |  |  | 10 |  |  | — |  |  | (10) |
Total consolidated | $ | 1,046 |  |  | $ | 605 |  |  | $ | 25 |  |  | $ | 84 |  |  | $ | 19 |  |  | $ | 363 |
Reconciliation of Segment Information to Consolidated Information Nine Months Ended September 30, 2022
|  |  |  |  | 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 | $ | 564 |  |  | $ | 147 |  |  | $ | (46) |  |  | $ | 24 |  |  | $ | — |  |  | $ | 347 |
Asset Management | 88 |  |  | 91 |  |  | — |  |  | — |  |  | — |  |  | (3) |
Total segments | 652 |  |  | 238 |  |  | (46) |  |  | 24 |  |  | — |  |  | 344 |
Corporate division | 3 |  |  | 104 |  |  | — |  |  | (3) |  |  | — |  |  | (98) |
Other | 34 |  |  | 14 |  |  | 15 |  |  | 3 |  |  | 25 |  |  | 7 |
Subtotal | 689 |  |  | 356 |  |  | (31) |  |  | 24 |  |  | 25 |  |  | 253 |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |
Realized gains (losses) on investments | (39) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (39) |
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives | (51) |  |  | (5) |  |  | — |  |  | — |  |  | — |  |  | (46) |
Fair value gains (losses) on CCS | 12 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12 |
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves | (180) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (180) |
Tax effect | — |  |  | — |  |  | — |  |  | (30) |  |  | — |  |  | 30 |
Total consolidated | $ | 431 |  |  | $ | 351 |  |  | $ | (31) |  |  | $ | (6) |  |  | $ | 25 |  |  | $ | 30 |

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