Segment Information

6 Months Ended

Jun. 30, 2022

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 segments 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’s 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 their financial guaranty policies associated with the FG VIEs’ debt is eliminated, whereas the reconciliation tables below present the FG VIEs and related eliminations in “Other”, and (ii) CIVs are consolidated by AGUS, a U.S. holding company, 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’s 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.” 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 use assets to assess performance and allocate resources.

The following table presents information for the Company’s operating segments.

Segment Information

	Second Quarter
	2022				2021
	Insurance		Asset Management		Insurance		Asset Management
	(in millions)
Third-party revenues	$	137	$	16	$	180	$	19
Intersegment revenues	2		12		2		2
Segment revenues	139		28		182		21
Segment expenses	41		28		47		24
Segment equity in earnings (losses) of investees	(34)		—		48		—
Less: Segment provision (benefit) for income taxes	9		—		31		(1)
Segment adjusted operating income (loss)	$	55	$	—	$	152	$	(2)

	Six Months
	2022				2021
	Insurance		Asset Management		Insurance		Asset Management
	(in millions)
Third-party revenues	$	413	$	46	$	357	$	37
Intersegment revenues	4		21		4		4
Segment revenues	417		67		361		41
Segment expenses	163		67		153		53
Segment equity in earnings (losses) of investees	(35)		—		67		—
Less: Segment provision (benefit) for income taxes	31		—		44		(3)
Segment adjusted operating income (loss)	$	188	$	—	$	231	$	(9)

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

Reconciliation of Segment Information to Consolidated Information

Three Months Ended June 30, 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	$	139	$	41	$	(34)	$	9	$	—	$	55
Asset Management	28		28		—		—		—		—
Total segments	167		69		(34)		9		—		55
Corporate division	1		36		—		—		—		(35)
Other	7		7		34		2		22		10
Subtotal	175		112		—		11		22		30
Reconciling items:
Realized gains (losses) on investments	(28)		—		—		—		—		(28)
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	6		—		—		—		—		6
Fair value gains (losses) on CCS	10										10
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	(73)		—		—		—		—		(73)
Tax effect	—		—		—		(8)		—		8
Total consolidated	$	90	$	112	$	—	$	3	$	22	$	(47)

Reconciliation of Segment Information to Consolidated Information

Three Months Ended June 30, 2021

					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	$	182	$	47	$	48	$	31	$	—	$	152
Asset Management	21		24		—		(1)		—		(2)
Total segments	203		71		48		30		—		150
Corporate division	—		36		—		(2)		—		(34)
Other	27		4		(14)		1		4		4
Subtotal	230		111		34		29		4		120
Reconciling items:
Realized gains (losses) on investments	4		—		—		—		—		4
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	(37)		(6)		—		—		—		(31)
Fair value gains (losses) on CCS	(6)		—		—		—		—		(6)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	5		—		—		—		—		5
Tax effect	—		—		—		(6)		—		6
Total consolidated	$	196	$	105	$	34	$	23	$	4	$	98

Reconciliation of Segment Information to Consolidated Information

Six Months Ended June 30, 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	$	417	$	163	$	(35)	$	31	$	—	$	188
Asset Management	67		67		—		—		—		—
Total segments	484		230		(35)		31		—		188
Corporate division	2		70		—		—		—		(68)
Other	21		12		24		2		31		—
Subtotal	507		312		(11)		33		31		120
Reconciling items:
Realized gains (losses) on investments	(25)		—		—		—		—		(25)
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	(1)		(4)		—		—		—		3
Fair value gains (losses) on CCS	11				—		—		—		11
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	(102)		—		—		—		—		(102)
Tax effect	—		—		—		(12)		—		12
Total consolidated	$	390	$	308	$	(11)	$	21	$	31	$	19

Reconciliation of Segment Information to Consolidated Information

Six Months Ended June 30, 2021

					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	$	361	$	153	$	67	$	44	$	—	$	231
Asset Management	41		53		—		(3)		—		(9)
Total segments	402		206		67		41		—		222
Corporate division	—		68		—		(5)		—		(63)
Other	48		11		(24)		1		8		4
Subtotal	450		285		43		37		8		163
Reconciling items:
Realized gains (losses) on investments	1		—		—		—		—		1
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	(59)		(9)		—		—		—		(50)
Fair value gains (losses) on CCS	(25)		—		—		—		—		(25)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	6		—		—		—		—		6
Tax effect	—		—		—		(14)		—		14
Total consolidated	$	373	$	276	$	43	$	23	$	8	$	109