Slide 1: Equity Investor Presentation September 30, 2018
EMBRACE POSSIBILITIES, INVEST IN CERTAINTIES Equity Investor Presentation September 30, 2018
Slide 2: Forward-Looking Statements and Safe Harbor Disclosure
Forward-Looking Statements and Safe Harbor Disclosure • This presentation contains information that includes or is based upon forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements give the expectations or forecasts of future
Slide 3: Conventions and Non-GAAP Financial Measures
Conventions and Non-GAAP Financial Measures • Unless otherwise noted, the following conventions are used in this presentation: – Ratings on Assured Guaranty’s insured portfolio and on bonds purchased pursuant to our loss mitigation or risk management strategies are our internal credit ratings. Inter
Slide 4: Table of Contents
Table of Contents • Third Quarter 2018 and YTD 2018 accomplishments • Assured Guaranty overview – Track record of creating shareholder value – Dividend limitation calculations – Simplified corporate structure • Underlying value – High-quality investment portfolio – Deleveraging while maintaining tot
Slide 5: Third Quarter 2018 Accomplishments
Third Quarter 2018 Accomplishments • Earned $161 million of non-GAAP operating income1, or $1.47 per share • Increased shareholders' equity per share, non-GAAP operating shareholders' equity1 per share and non-GAAP adjusted book value1 per share, reaching new records of $61.73, $60.20 and $84.51, re
Slide 6: YTD 2018 Accomplishments
YTD 2018 Accomplishments • Earned $390 million of non-GAAP operating income1, or $3.45 per share • Generated $567 million of new business production1 • Repurchased an additional 11.4 million common shares ($429 million) at an average price of $37.51 per share2 • On June 1, 2018, closed a reinsurance
Slide 7: Assured Guaranty Overview
Assured Guaranty Overview
Slide 8: Assured Guaranty Overview
Assured Guaranty Overview Assured Guaranty Ltd. ($ in billions) September 30, 2018 September 30, 2009 • We are the leading financial guaranty franchise, with over three decades of Net par outstanding $246.9 $646.6 experience in the municipal and U.S. public finance $190.4 $424.9 structured finance m
Slide 9: Non-GAAP Operating Income Growth Since 2004
Assured Guaranty Overview • Since our initial public offering in 2004, we have grown our annual non-GAAP operating income1 from $141 million in 2004 to $661 million in 2017, a 13% compounded annual growth rate (CAGR). • Non-GAAP operating income1 has grown through acquisitions, new business producti
Slide 10: Track Record of Creating Shareholder Value
Assured Guaranty Overview Track Record of Creating Shareholder Value • We have returned excess capital to shareholders by distributing dividends and repurchasing our common shares – Since 2013, when we started our capital management strategy of repurchasing our common shares, through November 8, 201
Slide 11: Dividend Limitation Calculations
Dividend Limitation Calculations Assured Guaranty Municipal Corp. Assured Guaranty Corp. Assured Guaranty Re Ltd. (AG Re) (Domiciled in New York) (Domiciled in Maryland) (Domiciled in Bermuda) • Based on most recently filed quarterly or annual statement • Based on most recently filed annual statemen
Slide 12: Simplified Corporate Structure
Assured Guaranty Overview Simplified Corporate Structure1 Shareholders Assured Guaranty Ltd. • Total investment portfolio and cash of $48 million2 (Head Office – Bermuda; Tax Residence – U.K.) • YTD 2018 annualized expenses of $30 million • YTD 2018 annualized dividend distribution of $73 Assured Gu
Slide 13: Underlying Value
Underlying Value
Slide 14: High-Quality Investment Portfolio
Underlying Value High-Quality Investment Portfolio Total Invested Assets and Cash1,2 As of September 30, 2018 Nearly 100% of BIG is held for loss A mitigation or other • Highly rated fixed maturity and short- BBB 18% 4% risk management term investments, 66% rated AA or strategies higher, and cash BI
Slide 15: Deleveraging While Maintaining Total Invested Assets
Underlying Value Deleveraging While Maintaining Total Invested Assets • Our insured net par outstanding to non-GAAP operating shareholders’ equity1 has declined from 157:1 in 4Q-09 to 38:1 as of 3Q-18 – Deleveraging is expected to continue in the near term as new business is not expected to fully re
Slide 16: Net Investment Income Generates Capital
Underlying Value Net Investment Income Generates Capital • Net investment income is higher Net Investment Income ($ in millions) than the combination of operating and interest expenses, a spread Estimated net that fosters capital growth investment income $423 $418 Net investment income $404 $393 $40
Slide 17: Historical Growth
Underlying Value Historical Growth Non-GAAP Adjusted Book Value1 per Share $84.51 $77.74 $22.72 $66.46 $20.53 $60.87 $1.59 $53.27 $15.85 $1.01 $48.26 $46.54 $46.22 $48.22 $17.07 $0.72 $44.84 $41.90 $41.97 $15.34 $0.84 $35.66 $14.63 $7.38 $9.05 $23.30 $18.46 $15.62 $0.69 $20.72 $60.20 $29.54 $5.31 $0
Slide 18: Creating Value
Creating Value
Slide 19: New Business Production: Penetration in U.S. Public Finance Market
Creating Value New Business Production (Par Insured) Penetration in the U.S. Public Finance Market (excluding SGI portfolio) • We are focused on building demand for our New Issue U.S. Public Finance guaranties, both in the primary and the Insured Par Sold and Transaction Penetration1,2 secondary mar
Slide 20: U.S. Structured Finance Business Activity
Creating Value New Business Production U.S. Structured Finance Business Activity U.S. Structured PVP1 • During 3Q-18 we continued to execute (excluding SGI reinsurance portfolio)2 transactions in aviation and commercial real ($ in millions) estate markets, and guaranteed a collateralized loan obliga
Slide 21: Non-U.S. Business Activity
Creating Value New Business Production Non-U.S. Business Activity Non-U.S. PVP1 • During 3Q-18 we closed three new transactions: (excluding SGI reinsurance portfolio)2 a guarantee of accommodation project for ($ in millions) $42 Durham University; a restructuring of an existing guarantee with a bank
Slide 22: Underwriting Principles and Pricing Discipline
Creating Value New Business Production Underwriting Principles and Pricing Discipline • PVP increased significantly in 3rd quarter 2018 compared with 3rd quarter 2017 - PVP increased 21% from $43 million in third quarter 2017 to $52 million in third quarter 2018 • Gross par written and PVP increased
Slide 23: Alternative Strategies: Acquisitions and Reinsurance
Creating Value Alternative Strategies Acquisitions and Reinsurance • SGI reinsurance transaction closed on June 1, 2018 - Resulted in $11.3 billion of gross written par and $391 million of PVP, which helped lead the Company to a 10-year record high for PVP - Increased non-GAAP adjusted book value by
Slide 24: Alternative Strategies: Alternative Investments
Creating Value Alternative Strategies Alternative Investments • In February 2018, the Company acquired a minority interest in Rubicon Infrastructure Advisors - Rubicon is a full-service investment banking firm active in the global infrastructure sector, that has advised on over 70 merger and acquisi
Slide 25: Commutations
Creating Value Commutations • Reassumption of previously ceded business has increased the unearned premium reserve and non-GAAP adjusted book value1 Commutations Since 2009 Ceded Par Outstanding by Reinsurer As of September 30, 2018 As of September 30, 2018 Commutation Reassumed Par Reassumed UPR Ga
Slide 26: Financial Results
Financial Results September 30, 2018
Slide 27: Third Quarter 2018 Results
Third Quarter 2018 Results Select Financial Items Select GAAP Results % Change vs. ($ in millions, except per share data and percentages) Quarter Ended September 30, 3Q-17 2018 2017 Net income (loss) $161 $208 (22)% Net income (loss) per diluted share $1.47 $1.72 (15)% Net earned premiums $142 $186
Slide 28: YTD 2018 Results
YTD 2018 Results Select Financial Items Select GAAP Results % Change vs. ($ in millions, except per share data and percentages) YTD Ended September 30, YTD 17 2018 2017 Net income (loss) $433 $678 (36)% Net income (loss) per diluted share $3.83 $5.48 (30)% Net earned premiums $423 $512 (17)% Net inv
Slide 29: Third Quarter and YTD Loss Measures
Third Quarter and YTD Loss Measures Economic loss development (all contracts): • Represents the estimated change in expected losses due to changes in transaction performance, discount rates, loss mitigation and other factors that affect the ultimate loss experience. Economic loss development exclude
Slide 30: Portfolio Overview
Portfolio Overview September 30, 2018
Slide 31: Four Discrete Operating Companies with Separate Capital Bases
Four Discrete Operating Companies with Separate Capital Bases Consolidated Statutory-Basis Claims-Paying Resources and Exposures As of September 30, 2018 ($ in millions) AGM AGC MAC AG Re8 Eliminations3 Consolidated Claims-paying resources Policyholders' surplus $2,203 $1,806 $269 $967 ($319) $4,926
Slide 32: Net Par Outstanding By Sector
Net Par Outstanding By Sector • Assured Guaranty’s insured portfolio is Consolidated Net Par Outstanding largely concentrated in U.S. public finance As of September 30, 2018 ($ in billions) Non-U.S. Structured – 77% U.S. public finance Finance A Average Rating – 18% Non-U.S. public finance $1.2 Non-
Slide 33: Net Par Outstanding Amortization
Net Par Outstanding Amortization • Amortization of the existing portfolio reduces rating Consolidated Net Par Outstanding Amortization1 agency capital charges, but also embedded future As of September 30, 2018 ($ in billions) earned premiums $640 Public Finance – Currently, the existing portfolio co
Slide 34: U.S. Public Finance
U.S. Public Finance Net Par Outstanding • U.S. public finance net par outstanding is U.S. Public Finance $190.4 billion and makes up 77% of our total As of September 30, 2018 insured portfolio as of September 30, 2018 ($ in billions) • U.S. public finance portfolio generally Higher Other Public perf
Slide 35: Puerto Rico Exposure
Public Finance Puerto Rico Exposure Par Exposure to the Commonwealth and its Agencies1 As of September 30, 2018 Net Par Gross Par ($ in millions) Outstanding 2 Outstanding Commonwealth Commonwealth of Puerto Rico - General Obligation Bonds 3 $1,341 $1,385 Constitutionally Puerto Rico Public Building
Slide 36: Puerto Rico Net Par Amortization
Public Finance Puerto Rico Exposure Scheduled Net Par Amortization of Exposure to the Commonwealth and its Agencies1 As of September 30, 2018 4Q 1Q 2Q 3Q 4Q 2028- 2033- 2038- 2043- ($ in millions) 2018 2019 2019 2019 2019 2020 2021 2022 2023 2024 2025 2026 2027 2032 2037 2042 2047 Total Commonwealth
Slide 37: Puerto Rico Net Debt Service Amortization
Public Finance Puerto Rico Exposure Scheduled Net Debt Service Amortization of Exposure to the Commonwealth and its Agencies1 As of September 30, 2018 4Q 1Q 2Q 3Q 4Q 2028- 2033- 2038- 2043- ($ in millions) 2018 2019 2019 2019 2019 2020 2021 2022 2023 2024 2025 2026 2027 2032 2037 2042 2047 Total Com
Slide 38: Consolidated Non-U.S. Exposure
Consolidated Non-U.S. Exposure Non-U.S. Public and Structured Finance Non-U.S. Exposure As of September 30, 2018 ($ in billions) • 97% of non-U.S. exposure is Public Finance Canada – Direct sovereign debt is limited to Poland ($272 Other $2.7 France million outstanding) $6.3 $3.2 Australia $2.2 6% 1
Slide 39: Structured Finance Exposures
Structured Finance Exposures Net Par Outstanding By Type As of September 30, 2018 U.S. and Non-U.S. ($ in billions) U.S. • Assured Guaranty’s total structured finance Pooled RMBS exposure of $240.9 billion at December 31, Corporate $4.6 $1.4 12% 2007 has declined by $229.1 billion to $11.8 39% billi
Slide 40: Consolidated U.S. RMBS
Consolidated U.S. RMBS • Our $4.6 billion U.S. RMBS portfolio is amortizing both on a dollar basis and as a U.S. RMBS by Exposure Type1 percentage of the portfolio As of September 30, 2018 ($ in billions) – Total U.S. RMBS has declined from $29.2 billion at December Subprime 31, 2009 to $4.6 billion
Slide 41: Below Investment Grade Exposures
Below Investment Grade Exposures Net Par Outstanding by BIG Category1 Financial Guaranty Insurance and Credit Derivatives Surveillance Categories ($ millions) September 30, 2018 December 31, 2017 • As of September 30, 2018, Category 1 approximately $2.9 billion (28%) of U.S. public finance $1,558 $2
Slide 42: BIG Exposure Decline
BIG Exposure Decline • Since 4Q-11, BIG net par outstanding has declined by $16.5 billion • The reassumption of American Overseas and Syncora increased BIG net par outstanding by approximately $32 million and $336 million respectively in the first nine months of 2018 • The largest components of our
Slide 43: BIG Exposures > $250 Million
BIG Exposures > $250 Million (dollars in millions) BIG Exposures Greater Than $250 Million as of September 30, 2018 Net Par Internal Type1 Name or Description Outstanding Rating PF Puerto Rico General Obligation, Appropriations and Guarantees of the Commonwealth $1,498 CCC- PF Puerto Rico Highways a
Slide 44: Appendix
ASSURED GUARANTY F | Appendix 5S.
Slide 45: Explanation of Non-GAAP Financial Measures
Appendix Explanation of Non-GAAP Financial Measures To reflect the key financial measures that management analyzes in evaluating the Company’s operations and progress towards long-term goals, the Company discloses both financial measures determined in accordance with GAAP and financial measures not
Slide 46: Explanation of Non-GAAP Financial Measures
Appendix Explanation of Non-GAAP Financial Measures Non-GAAP Operating Income: Management believes that non-GAAP operating income is a useful measure because it clarifies the understanding of the underwriting results and financial condition of the Company and presents the results of operations of th
Slide 47: Explanation of Non-GAAP Financial Measures (Cont'd)
Appendix Explanation of Non-GAAP Financial Measures (Cont’d) Management uses non-GAAP adjusted book value, adjusted for FG VIE consolidation, to measure the intrinsic value of the Company, excluding franchise value. Growth in non-GAAP adjusted book value per share, adjusted for FG VIE consolidation
Slide 48: Reconciliation of Gross Written Premiums (GWP) to PVP
Appendix Reconciliation of Gross Written Premiums (GWP) to PVP Reconciliation of GWP to PVP Three Months Ended Year Ended December 31, Sept 30, Sept 30, (dollars in millions) 2018 2017 2017 2016 2015 2014 2013 Total GWP $50 $45 $307 $154 $181 $104 $123 Less: Installment GWP and other GAAP adjustment
Slide 49: Reconciliation of Net Income (Loss) to Non-GAAP Operating Income
Appendix Reconciliation of Net Income (Loss) to Non-GAAP Operating Income1 Three Months Ended Nine Months Ended Non-GAAP Operating Income Reconciliation September 30, September 30, (dollars in millions, except per share amounts) 2018 2017 2018 2017 Per Diluted Per Diluted Per Diluted Per Diluted Tot
Slide 50: Reconciliation of Net Income to Non-GAAP Operating Income (2004-2017)
Appendix Reconciliation of Net Income (Loss) to Non-GAAP Operating Income1 (2004-2017) Non-GAAP Operating income reconciliation Year Ended December 31, (dollars in millions, except per share amounts) 2017 2016 2015 2014 2013 2012 2011 Total Per Share Total Per Share Total Per Share Total Per Share T
Slide 51: Reconciliation of Shareholders' Equity to Non-GAAP Adjusted Book Value
Appendix Reconciliation of Shareholders’ Equity to Non-GAAP Adjusted Book Value1 Non-GAAP Adjusted book value reconciliation As of (dollars in millions, except per share amounts) September 30, 2018 June 30, 2018 December 31, 2017 September 30, 2017 June 30, 2017 December 31, 2016 Total Per Share Tot
Slide 52: Reconciliation of Shareholders' Equity to Adjusted Book Value (2004-2010)
Appendix Reconciliation of Shareholders’ Equity to Non-GAAP Adjusted Book Value1 (2004-2010) Non-GAAP Adjusted book value reconciliation (dollars in millions, except per share amounts) 2Q 2004 2004 2005 2006 2007 2008 2009 2010 Per Per Per Per Per Per Per Per Total Share Total Share Total Share Tota
Slide 53: Reconciliation of Shareholders' Equity to Adjusted Book Value (2011-2017)
Appendix Reconciliation of Shareholders’ Equity to Non-GAAP Adjusted Book Value1 (2011-2017) Non-GAAP Adjusted book value reconciliation (dollars in millions, except per share amounts) 2011 2012 2013 2014 2015 2016 2017 Per Per Per Per Per Per Per Total Share Total Share Total Share Total Share Tota
Slide 54: Calculation of Non-GAAP Operating Portfolio Leverage
Appendix Calculation of Non-GAAP Operating Portfolio Leverage Non-GAAP Operating Leverage (dollars in millions, except leverage) 2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q 2018 2018 2019 2020 2021 Insured Net Par Outstanding $640,194 $616,686 $556,830 $518,772 $459,107 $403,729 $358,571 $296,31
Slide 55: Reconciliation of GAAP ROE to Non-GAAP Operating ROE
Appendix Reconciliation of GAAP ROE to Non-GAAP Operating ROE ROE Reconciliation (dollars in millions) Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net income (loss) $161 $208 $433 $678 Non-GAAP Operating income 161 156 390 570 Gain (loss) related to FG VIE co
Slide 56: Assured Guaranty Contacts
Assured Guaranty Contacts: Robert Tucker Senior Managing Director, Investor Relations and Corporate Communications Direct: 212.339.0861 rtucker@agltd.com Andre Thomas Managing Director, Equity Investor Relations Direct: 212.339.3551 athomas@agltd.com Equity Investor Presentation September 30, 2018 5