Segment Information

3 Months Ended

Mar. 31, 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. The Asset Management segment consists of AssuredIM, which provides asset management services to third-party investors as well as to the U.S. Insurance Subsidiaries and AGAS.

    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 other operating expenses attributed to the corporate activities of AGL and the U.S. Holding Companies.

    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 AssuredIM 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 associated with the financial guaranty policies associated with the FG VIEs’ debt are eliminated, whereas

the reconciliation tables below present the FG VIEs and related eliminations in “other”, and (ii) CIVs are consolidated by AGUS, whereas in the reconciliation tables below, the CIVs and related eliminations of the Insurance segment’s “equity in earnings (losses) of investees” associated with AGAS’ interest in CIVs are presented in “other.” In addition, under GAAP, reimbursable fund expenses are shown as a component of asset management fees and included in total revenues, whereas in the Asset Management segment in the tables below, they are 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:

•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

	Three Months Ended March 31,
	2023				2022
	Insurance		Asset Management		Insurance		Asset Management
	(in millions)
Third-party revenues	$	188	$	25	$	276	$	30
Intersegment revenues	2		16		2		9
Segment revenues	190		41		278		39
Segment expenses	79		42		122		39
Segment equity in earnings (losses) of investees	30		—		(1)		—
Less: Segment provision (benefit) for income taxes	24		—		22		—
Segment adjusted operating income (loss)	$	117	$	(1)	$	133	$	—

The tables below present a reconciliation of significant components of segment information to the comparable consolidated amounts.

Reconciliation of Segment Information to Consolidated Information

First Quarter 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	$	190	$	79	$	30	$	24	$	—	$	117
Asset Management	41		42		—		—		—		(1)
Total segments	231		121		30		24		—		116
Corporate division	2		48		—		(2)		—		(44)
Other	35		(4)		(28)		(1)		16		(4)
Subtotal	268		165		2		21		16		68
Reconciling items:
Realized gains (losses) on investments	(2)		—		—		—		—		(2)
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	13		—		—		—		—		13
Fair value gains (losses) on CCS	(16)		—		—		—		—		(16)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	20		—		—		—		—		20
Tax effect	—		—		—		2		—		(2)
Total consolidated	$	283	$	165	$	2	$	23	$	16	$	81

Reconciliation of Segment Information to Consolidated Information

First Quarter 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	$	278	$	122	$	(1)	$	22	$	—	$	133
Asset Management	39		39		—		—		—		—
Total segments	317		161		(1)		22		—		133
Corporate division	1		34		—		—		—		(33)
Other	14		5		(10)		—		9		(10)
Subtotal	332		200		(11)		22		9		90
Reconciling items:
Realized gains (losses) on investments	3		—		—		—		—		3
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	(7)		(4)		—		—		—		(3)
Fair value gains (losses) on CCS	1		—		—		—		—		1
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	(29)		—		—		—		—		(29)
Tax effect	—		—		—		(4)		—		4
Total consolidated	$	300	$	196	$	(11)	$	18	$	9	$	66