ASSURED GUARANTY LTDAGO
ASSURED GUARANTY LTD Income Taxes Disclosure
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 are carried on in Bermuda.
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 applies 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.
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.
On December 27, 2023, the Government of Bermuda enacted a corporate income tax at the rate of 15% which applies 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 statements of operations. On December 11, 2025, the Government of Bermuda amended the Corporate Income Tax Act of 2023 (the CIT Act) and in particular the computation of the ETA. The Company recognized a deferred tax benefit of $34 million related to these changes. The Company began utilizing the ETA deferred tax asset in 2025 and expects to continue to realize it over approximately 10 to 15 years, consistent with the expected reversal pattern of the underlying components. As of December 31, 2025, the remaining ETA deferred tax asset was $207 million.
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.
Non-interest-bearing tax and loss bonds are purchased to prepay the tax benefit that results from deducting contingency reserves as provided under Code Section 832(e). The Company records the purchase of tax and loss bonds in deferred taxes.
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, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Deferred tax assets (liabilities) | $ | 246 | $ | 262 | |||||||
| Current tax assets | 2 | 10 | |||||||||
| Current tax liabilities | (68) | (13) | |||||||||
Components of Net Deferred Tax Assets (Liabilities)
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Loss and LAE reserve | $ | 31 | $ | 2 | |||||||
| Net unrealized investment losses | 25 | 54 | |||||||||
| Intangible assets | 134 | 149 | |||||||||
| Value of in-force business | 73 | 45 | |||||||||
| Net operating loss (NOL) | 38 | 31 | |||||||||
| Depreciation | 49 | 47 | |||||||||
Deferred compensation | 39 | 38 | |||||||||
| FG VIEs | 2 | 49 | |||||||||
Other | 30 | 23 | |||||||||
| Total deferred tax assets | 421 | 438 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Investments | 69 | 127 | |||||||||
| Unrealized gains on credit derivatives, net | 33 | 14 | |||||||||
| Unearned premium reserves, net | 33 | 5 | |||||||||
Other | 40 | 30 | |||||||||
| Total deferred tax liabilities | 175 | 176 | |||||||||
| Net deferred tax assets (liabilities) | $ | 246 | $ | 262 | |||||||
As part of the acquisition of CIFG Holding Inc., the Company acquired $189 million of 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, 2025, AG, a U.S. subsidiary, had gross deferred tax assets of approximately $19 million for federal NOL carryforwards which will begin to expire in 2033. In addition, as of December 31, 2025, the Company had gross deferred tax assets for certain non-U.S. NOL carryforwards of approximately $19 million, which do not expire.
Valuation Allowance
During 2023, the Company recorded a return to provision adjustment, which included the utilization of $3 million in foreign tax credits (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, 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, 2025 and December 31, 2024. 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, 2025, 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, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Current provision (benefit) for income taxes: | |||||||||||||||||
| U.K. | $ | 34 | $ | 13 | $ | — | |||||||||||
| Foreign: | |||||||||||||||||
| U.S. federal | 78 | 70 | 76 | ||||||||||||||
| U.S. state and local | 9 | 17 | (13) | ||||||||||||||
| Other | 3 | — | — | ||||||||||||||
| Total current | 124 | 100 | 63 | ||||||||||||||
| Deferred provision (benefit) for income taxes: | |||||||||||||||||
| U.K. | (2) | (3) | 4 | ||||||||||||||
| Foreign: | |||||||||||||||||
| U.S. federal | 19 | 3 | 31 | ||||||||||||||
| Other | (22) | (4) | (191) | ||||||||||||||
| Total deferred | (5) | (4) | (156) | ||||||||||||||
| Total provision (benefit) for income taxes | $ | 119 | $ | 96 | $ | (93) | |||||||||||
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 15%, starting January 1, 2025, and 0% for 2024 and 2023, 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 Tax Cuts and Jobs Act of 2017 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.
The following tables present pre-tax income and revenue by jurisdiction.
Pre-tax Income (Loss) by Tax Jurisdiction
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| U.K. | $ | (10) | $ | (33) | $ | (25) | |||||||||||
| Foreign: | |||||||||||||||||
| U.S. | 570 | 445 | 622 | ||||||||||||||
| Bermuda | 111 | 90 | 79 | ||||||||||||||
| France | (8) | (14) | (8) | ||||||||||||||
| Other | (1) | — | — | ||||||||||||||
| Total | $ | 662 | $ | 488 | $ | 668 | |||||||||||
Effective Tax Rate Reconciliation
As described in Note 1. Business and Basis of Presentation, Recent Accounting Standards Adopted, the Company has elected to prospectively adopt the guidance in ASU 2023-09. The following table is a reconciliation of the U.K. national statutory tax rate to the Company’s effective rate for the year ended December 31, 2025 in accordance with ASU 2023-09:
| Year Ended December 31, 2025 | |||||||||||
| Amount (in millions) | % | ||||||||||
| U.K. national statutory tax rate | $ | 165 | 25.0 | % | |||||||
| Foreign tax effects | |||||||||||
| U.S. | |||||||||||
| Statutory tax rate difference between U.S. and U.K. | (23) | (3.5) | |||||||||
| NCI | (8) | (1.3) | |||||||||
| Other | (3) | (0.5) | |||||||||
| Bermuda | |||||||||||
| Statutory tax rate difference between Bermuda and U.K. | (11) | (1.7) | |||||||||
| Effects of Bermuda tax law change | (35) | (5.3) | |||||||||
| Effect of cross-border tax laws | |||||||||||
| Global minimum tax | 33 | 5.0 | |||||||||
| Other adjustments | 1 | 0.2 | |||||||||
| Effective tax rate | $ | 119 | 17.9 | % | |||||||
During the year ended December 31, 2025, amendments to the CIT Act, as described above, removed the recognition of deferred tax liabilities for purposes relevant to the Pillar Two framework resulted in AG Re and AGRO having a jurisdictional effective tax rate below 15%. As a result, the Company became subject to the OECD Pillar Two global minimum tax and recorded a top‑up tax of $33 million within income tax expense for the year.
A reconciliation of the difference between the provision for income taxes and the expected tax provision at statutory rates in taxable jurisdictions for the years ended December 31, 2024, and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 is presented below.
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| (dollars in millions) | |||||||||||
| Expected tax provision (benefit) | $ | 82 | $ | 122 | |||||||
| Tax-exempt interest | (10) | (15) | |||||||||
| Return to provision adjustment | (1) | (6) | |||||||||
| NCI | (3) | (5) | |||||||||
| State taxes, net of federal benefit | 13 | (10) | |||||||||
| Foreign taxes | 5 | 11 | |||||||||
| Stock based compensation | 1 | 2 | |||||||||
Bermuda ETA | (1) | (189) | |||||||||
| Global minimum tax | 13 | — | |||||||||
| Other | (3) | (3) | |||||||||
| Total provision (benefit) for income taxes | $ | 96 | $ | (93) | |||||||
| Effective tax rate | 19.7 | % | (13.9) | % | |||||||
The expected tax provision (benefit) for the years ended December 31, 2024, and 2023 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.
Income Tax Payments
The following table presents income taxes paid, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025. In applying this guidance, the Company’s policy is to include only cash payments made directly to taxing authorities in its income tax payment disclosures and, accordingly, does not consider purchases of non interest bearing U.S. Mortgage Guaranty Tax and Loss Bonds to be prepaid income taxes.
Income Taxes Paid, Net of Refunds Received, by Jurisdiction
| Year Ended December 31, 2025 | |||||
| (in millions) | |||||
| U.K. | $ | — | |||
| Foreign: | |||||
| U.S. - federal | 49 | ||||
| Other | 2 | ||||
| Total | $ | 51 | |||
The company paid $90 million and $4 million during the years ended December 31, 2024 and 2023, respectively.
Audits
During 2025, the IRS closed the audit of AGUS’s 2018 and 2019 tax years with no impact to previously accrued taxes and opened an audit of AGUS 2021 tax year. As of December 31, 2025, AGUS had open tax years with the IRS for 2021 forward. As of December 31, 2025, Assured Guaranty Overseas US Holdings Inc. had open tax years with the IRS for 2022 forward and is not currently under audit. In December 2023, His Majesty’s Revenue & Customs (HMRC) issued an inquiry into the Company’s 2021 U.K. tax returns. In October 2025, HMRC issued an inquiry into the Company’s 2022 and 2023 U.K. tax returns along with issuing inquires into AGUK, Assured Guaranty (UK) Services Limited and Assured Guaranty Finance Overseas Ltd.’s 2023 U.K. tax returns. As of December 31, 2025, the Company had open tax years with HMRC for 2021 forward; AGUK, Assured Guaranty (UK) Services Limited and Assured Guaranty Finance Overseas Ltd. had open tax years with HMRC for 2023 forward; and the Company’s other U.K. subsidiaries had open tax year with HMRC for 2024 forward. The Company’s French subsidiary is not currently under examination and has open tax years of 2021 forward.
Uncertain Tax Positions
During the years ended December 31, 2025, 2024, and 2023, 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, 2025, 2024 and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.