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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes AGL is a tax resident in the U.K. although it remains a Bermuda-based company and its administrative and head office functions continue to be carried on in Bermuda. Under Bermuda law, there was no Bermuda income, corporate or profits tax or withholding tax, capital gains tax or capital transfer tax payable by AGL or the Bermuda Subsidiaries (collectively, AG Re, AGRO and Cedar Personnel Ltd.) in 2024 and 2023. AGL’s U.S., U.K. and French subsidiaries are subject to income taxes imposed by U.S., U.K. and French authorities, respectively, and file applicable tax returns. In addition, AGRO, a Bermuda domiciled company, has elected under Section 953(d) of the IRS to be taxed as a U.S. domestic corporation. In July of 2023, the U.K. government passed legislation to implement the Organization for Economic Co-Operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) Pillar Two income inclusion rule. This includes a multinational top-up tax which will apply to large multinational corporations for accounting periods beginning on or after December 31, 2023. This applies to AGL and its subsidiaries, requiring a minimum effective rate of 15% in all jurisdictions in which they operate. On December 27, 2023, the Bermuda government enacted a corporate income tax at the rate of 15% which will apply to the Bermuda Subsidiaries for accounting periods starting on or after January 1, 2025. The enactment of the corporate income tax regime required the Company to recognize Bermuda deferred taxes for the first time in the fourth quarter of 2023. An economic transition adjustment (ETA) equal to the difference between the fair market value and the carrying value of assets and liabilities of each of the Company’s Bermuda insurance subsidiaries as of September 30, 2023 resulted in the establishment of a deferred tax asset and corresponding benefit of $189 million reported in the fourth quarter of 2023 consolidated statement of operations. The ETA is expected to be utilized over 10 to 15 years, beginning in 2025. AGUS files a consolidated federal income tax return with all of its U.S. subsidiaries. Assured Guaranty Overseas US Holdings Inc. and its subsidiaries, AGRO and AG Intermediary Inc., file their own consolidated federal income tax return. Accounting Policy The provision for income taxes consists of an amount for taxes currently payable and an amount for deferred taxes. Deferred income taxes are provided for temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities, using enacted rates in effect for the year in which the differences are expected to reverse. The Company recognizes tax benefits only if a tax position is “more likely than not” to prevail. The Company elected to account for tax associated with Global Intangible Low-Taxed Income (GILTI) as a current-period expense when incurred. Deferred and current tax assets and liabilities are reported in “other assets” or ”other liabilities” on the consolidated balance sheets. Tax Assets (Liabilities) Deferred and Current Tax Assets (Liabilities)
| As of December 31,
| 2024 |  | 2023
| (in millions)
Deferred tax assets (liabilities) | $ | 262 |  |  | $ | 250 |
Current tax assets | 10 |  |  | — |
Current tax liabilities | (13) |  |  | (9) |
Components of Net Deferred Tax Assets (Liabilities)
| As of December 31,
| 2024 |  | 2023
| (in millions)
Deferred tax assets: |  |  |
Net unrealized investment losses | $ | 54 |  |  | $ | 49 |
Intangible assets | 149 |  |  | 149 |
Value of in-force business | 45 |  |  | 45 |
Net operating loss | 31 |  |  | 30 |
Depreciation | 47 |  |  | 45 |
Deferred compensation | 38 |  |  | 32 |
FG VIEs | 49 |  |  | — |
Other | 25 |  |  | 32 |
Total deferred tax assets | 438 |  |  | 382 |
Deferred tax liabilities: |  |  |
Investments | 127 |  |  | 65 |
Other | 49 |  |  | 67 |
Total deferred tax liabilities | 176 |  |  | 132 |
Net deferred tax assets (liabilities) | $ | 262 |  |  | $ | 250 |
As part of the acquisition of CIFG Holding Inc. (CIFGH, and together with its subsidiaries, CIFG), the Company acquired $189 million of net operating losses (NOL). The NOL has been limited under the Code Section 382 due to a change in control as a result of the acquisition. As of December 31, 2024, AG, a U.S. subsidiary, had gross deferred tax assets of approximately $21 million for federal NOL carryforwards which will begin to expire in 2033. In addition, as of December 31, 2024, the Company had gross deferred tax assets for certain non-U.S. NOL carryforwards of approximately $10 million which do not expire. Valuation Allowance During 2022, the Company recorded a return to provision adjustment, which included the utilization of $19 million in foreign tax credits (FTC), thereby reducing the Company’s FTC from $24 million as of December 31, 2021 to $5 million as of December 31, 2022. FTC were established under the 2017 Tax Cuts and Jobs Act (TCJA) for use against regular tax in future years, and would expire in 2027. In analyzing the future realizability of FTC, the Company notes limitations on future foreign source income due to overall foreign losses as negative evidence. As of December 31, 2022, the Company came to the conclusion that, after reviewing positive and negative evidence, it is more likely than not that the FTC would not be utilized, and therefore, maintained a valuation allowance of $5 million with respect to this tax attribute. During 2023, the Company recorded a return to provision adjustment, which included the utilization of $3 million in FTC, thereby reducing the Company’s FTC to $2 million. As of December 31, 2023, the Company believed that the weight of the positive evidence outweighed the negative evidence regarding the realization of the Company’s FTC, resulting in the release of the corresponding $2 million valuation allowance and bringing it to zero. The Company came to the conclusion that it is more likely than not that the deferred tax assets will be fully realized after weighing all positive and negative evidence available as required under GAAP. The positive evidence that was considered included the cumulative income the Company has earned over the last three years, and the significant unearned premium income to be included in taxable income. The positive evidence outweighs any negative evidence that exists. As such, the Company believes that no valuation allowance is necessary in connection with the remaining deferred tax assets. The Company will continue to analyze the need for a valuation allowance on a quarterly basis. Changes in market conditions since 2022, including rising interest rates, resulted in the recording of deferred tax assets related to net unrealized tax capital losses that remained as of December 31, 2024 and December 31, 2023. When assessing recoverability of these deferred tax assets, the Company considers the ability and intent to hold the underlying securities to recovery in value, if necessary, as well as other factors as noted above. As of December 31, 2024, based on all available evidence, including capital loss carryback capacity, the Company concluded that the deferred tax assets related to the unrealized tax capital losses on the available-for-sale securities portfolios are, more likely than not, expected to be realized. Provision for Income Taxes The components of the provision (benefit) for income taxes were as follows: Current and Deferred Provision (Benefit) for Income Taxes
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Current provision (benefit) for income taxes: |  |  |  |  |
Federal | $ | 70 |  |  | $ | 76 |  |  | $ | (1) |
State and local | 17 |  |  | (13) |  |  | 15 |
Foreign | 13 |  |  | — |  |  | — |
Total current | 100 |  |  | 63 |  |  | 14 |
Deferred provision (benefit) for income taxes: |  |  |  |  |
Federal | 3 |  |  | 31 |  |  | 12 |
Foreign | (7) |  |  | (187) |  |  | (15) |
Total deferred | (4) |  |  | (156) |  |  | (3) |
Total provision (benefit) for income taxes | $ | 96 |  |  | $ | (93) |  |  | $ | 11 |
The Company’s overall effective tax rate fluctuates based on the distribution of income across jurisdictions. The effective tax rates reflect the proportion of income recognized by each of the Company’s operating subsidiaries, with: •U.S. subsidiaries taxed at the U.S. marginal corporate income tax rate of 21%; •French subsidiary taxed at the French marginal corporate tax rate of 25%; •Bermuda Subsidiaries taxed at the Bermuda marginal corporate tax rate of 0%, unless subject to U.S. tax by election; and •U.K. subsidiaries taxed at the U.K. marginal corporate tax rate of 25% for periods starting April 1, 2023 and 19% for periods ending on or before March 31, 2023. Effective January 1, 2024, the U.K. adopted a global minimum tax rate of 15% under the OECD’s BEPS Pillar Two rules. Controlled foreign corporations (CFCs) apply the local marginal corporate tax rate. In addition, the TCJA created a new requirement that a portion of the GILTI earned by CFCs must be included currently in the gross income of the CFCs’ U.S. shareholder. A reconciliation of the difference between the provision for income taxes and the expected tax provision at statutory rates in taxable jurisdictions is presented below. Effective Tax Rate Reconciliation
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Expected tax provision (benefit) | $ | 82 |  |  | $ | 122 |  |  | $ | 23 |
Tax-exempt interest | (10) |  |  | (15) |  |  | (14) |
Return to provision adjustment | (1) |  |  | (6) |  |  | (20) |
Noncontrolling interest | (3) |  |  | (5) |  |  | (3) |
State taxes, net of federal benefit | 13 |  |  | (10) |  |  | 12 |
Foreign taxes | 5 |  |  | 11 |  |  | 6 |
Stock based compensation | 1 |  |  | 2 |  |  | 5 |
Bermuda ETA | (1) |  |  | (189) |  |  | — |
Global minimum tax | 13 |  |  | — |  |  | — |
Other | (3) |  |  | (3) |  |  | 2 |
Total provision (benefit) for income taxes | $ | 96 |  |  | $ | (93) |  |  | $ | 11 |
Effective tax rate | 19.7 | % |  | (13.9) | % |  | 7.2 | %
The expected tax provision (benefit) is calculated as the sum of pre-tax income in each jurisdiction multiplied by the statutory tax rate of the jurisdiction by which it will be taxed. Where there is a pre-tax loss in one jurisdiction and pre-tax income in another, the total combined expected tax rate may be higher or lower than any of the individual statutory rates. The following tables present pre-tax income and revenue by jurisdiction. Pre-tax Income (Loss) by Tax Jurisdiction
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
U.S. | $ | 445 |  |  | $ | 622 |  |  | $ | 189 |
Bermuda | 90 |  |  | 79 |  |  | 44 |
U.K. | (33) |  |  | (25) |  |  | (69) |
France | (14) |  |  | (8) |  |  | (16) |
Total | $ | 488 |  |  | $ | 668 |  |  | $ | 148 |
Revenue by Tax Jurisdiction
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
U.S. | $ | 720 |  |  | $ | 1,169 |  |  | $ | 661 |
Bermuda | 130 |  |  | 165 |  |  | 84 |
U.K. | 23 |  |  | 37 |  |  | (15) |
France | (1) |  |  | 2 |  |  | (8) |
Other | — |  |  | — |  |  | 1 |
Total | $ | 872 |  |  | $ | 1,373 |  |  | $ | 723 |
Pre-tax income by jurisdiction may be disproportionate to revenue by jurisdiction to the extent that insurance losses incurred are disproportionate. Audits As of December 31, 2024, AGUS had open tax years with the U.S. IRS for 2018 forward and is currently under audit for the 2018 and 2019 tax years. As of December 31, 2024, Assured Guaranty Overseas US Holdings Inc. had open tax years with the IRS for 2021 forward and is not currently under audit with the IRS. In September 2022, His Majesty’s Revenue & Customs (HMRC) completed a business risk review of Assured Guaranty that commenced in July 2022 and assigned a low-risk rating for corporate taxes in the U.K. In December 2023, HMRC issued an inquiry into the Company’s 2021 U.K. tax returns. As of December 31, 2024, the Company’s U.K. subsidiaries had open tax years with HMRC for 2021 forward. The Company’s French subsidiary is not currently under examination and has open tax years of 2020 forward. Uncertain Tax Positions During the years ended December 31, 2024, 2023, and 2022, there were no unrecognized tax benefits. There were no accruals for the payment of interest and penalties related to income taxes as of each of December 31, 2024, 2023, and 2022.

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