ASSURED GUARANTY LTDAGO

ASSURED GUARANTY LTD Goodwill & Intangibles Disclosure

10-KFiled Feb 28, 20242 min read
Goodwill and Other Intangible Assets
 
Accounting Policy

    Goodwill represents the excess of cost over the net fair value of assets and liabilities at the date of acquisition. Finite-lived intangible assets are recorded at fair value on the date of acquisition and are amortized over their estimated useful lives.

Goodwill and Intangible Assets

    The following table summarizes the carrying value for the Company’s goodwill and other intangible assets:

Goodwill and Other Intangible Assets
As of December 31,
 20232022
 (in millions)
Goodwill$— $117 
Finite-lived intangible assets:
Finite-lived intangible assets, gross (1)1 82 
Accumulated amortization(1)(42)
Finite-lived intangible assets, net— 40 
Indefinite-lived intangible assets (insurance licenses)6 6 
Total goodwill and other intangible assets$6 $163 
 ____________________
(1)    The December 31, 2022 amount primarily included CLO contracts and investment management contracts of $42 million and $24 million, respectively, and had a weighted average amortization period ranging from 1.2 years to 6.8 years.

Goodwill and substantially all finite-lived intangible assets were related to AssuredIM. In 2023, in connection with the Sound Point Transaction and the AHP Transaction, the carrying value of all goodwill and the intangible assets associated with AssuredIM were reduced to zero. See Note 1, Business and Basis of Presentation, for additional information.

To date, there have been no impairments of goodwill or finite-lived intangible assets. Amortization expense associated with the finite-lived intangible assets was $2 million, $11 million and $12 million for the years ended December 31, 2023, 2022 and 2021, respectively, and is reported in “other operating expenses” in the consolidated statements of operations.

The Company merged MAC with and into AGM, with AGM as the surviving company on April 1, 2021. Upon the merger, all direct insurance policies issued by MAC became direct insurance obligations of AGM. As a result, the Company wrote off the $16 million carrying value of the indefinite-lived intangible asset related to the MAC insurance licenses. This was reported in “other operating expenses” in the Insurance segment.

Historical Timeline

Fiscal YearFiled
2023Feb 28, 2024Showing above
2022Mar 1, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 28, 2020

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Other Available Disclosures

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