UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒        
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐    Preliminary Proxy Statement
☐    Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒    Definitive Proxy Statement
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☐    Soliciting Material under §240.14a-12
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Assured Guaranty Ltd.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)


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☒    No fee required
☐    Fee paid previously with preliminary materials
☐    Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-1    












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March 23, 2022
DEAR SHAREHOLDERS:     
It is with great pleasure that we invite you to our 2022 Annual General Meeting of shareholders on Wednesday, May 4, 2022, at 6 Bevis Marks in London. Whether or not you plan to attend the meeting, please vote your shares; your vote is important to us.
More than five years of difficult and complex negotiation and litigation over defaulted insured Puerto Rico exposures finally bore fruit in 2021. We completed two plan support agreements with the Federal Oversight Management Board for Puerto Rico and other important stakeholders in 2021, covering 74% of the Puerto Rico debt outstanding on December 31, 2021. This led directly to the resolution just last week of a significant portion of our insurance exposure to Puerto Rico -- approximately $1.3 billion of net par outstanding at December 31, 2021. With the resolution of our Puerto Rico exposures so much more likely when we closed our books for the year, we were able to take a benefit against our expected losses related to Puerto Rico that was the primary driver of the $204 million economic benefit against our expected losses in the public finance sector.
Similarly, more than a decade of hard work with servicers in our legacy residential mortgage backed securities (RMBS) portfolio, encouraging the servicers to keep borrowers in their homes through modifications and forbearances and to maintain liens on the homes, continued to pay off in 2021 as ongoing home price appreciation improved expected recoveries and performance of our insured RMBS portfolio, which, over the year, resulted in an economic benefit against our expected losses of $100 million.
Together, the many-years-long loss mitigation efforts for our Puerto Rico and legacy RMBS exposures contributed substantially to our 2021 net income of $389 million and our 2021 adjusted operating income* of $470 million, or $5.23 and $6.32 per share, respectively. Our 2021 net income per share increased by nearly 25% from 2020, and our 2021 adjusted operating income per share more than doubled from 2020.
We enjoyed a very successful year in our primary business, financial guaranty insurance. In our primary market for that product, U.S. municipal finance, we insured 5.0% out of the entire U.S. new issue municipal market, up substantially from 4.4% in 2020, and the most since 2011. With a more than 60% share of insured par issued, we led the municipal bond insurance industry to its highest market penetration in a dozen years. This helped us to achieve in 2021 gross written premium of $377 million and new business production in the insurance segment, a non-GAAP financial measure we refer to as PVP*, of $361 million.
We continued to make important progress in managing our capital by issuing $900 million of new public debt and retiring higher interest debt, and by returning $562 million to our shareholders through share repurchases and dividends.
In our asset management business, we issued $2.6 billion in new collateralized loan obligations (CLOs), which contributed significantly to the $3.0 billion of inflows of third-party assets under management, which we refer to as AUM, during the year — above our target. We also take advantage of the knowledge in our asset management business to enhance our returns on a portion of our insurance subsidiaries' investment assets. In 2021, we had equity in earnings of investees from funds managed by our asset management business of $80 million, nearly double the $42 million in 2020.



These and the other achievements highlighted in this proxy statement helped us to build substantial shareholder value during 2021 by all of the measures we use. By year-end 2021, our shareholders’ equity attributable to Assured Guaranty Ltd. per share, adjusted operating shareholder’s equity* per share and adjusted book value* per share all reached record levels, at $93.19, $88.73 and $130.67, respectively. Our share price rose 59.4% from $31.49 at year-end 2020 to $50.20 at year-end 2021.
We accomplished all of this while successfully navigating COVID-19 restrictions and taking important steps in environmental and social responsibility areas described further within this proxy statement. We could not be prouder of all that our employees accomplished in 2021.
Sincerely,
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Francisco L. Borges 
  
Dominic J. Frederico 
Chair of the Board    President and Chief Executive Officer

















 
*     Adjusted operating shareholder’s equity per share, adjusted book value per share, adjusted operating income and PVP are non-GAAP financial measures. An explanation of these measures, which are considered when setting executive compensation, and a reconciliation to the most comparable GAAP measures, may be found on pages 102 to106 of our Annual Report on Form 10-K for the year ended December 31, 2021, which is available on our website at www.assuredguaranty.com. In addition, please refer to the section entitled “Forward Looking Statements” following the cover of that Annual Report on Form 10-K.



March 23, 2022
Assured Guaranty Ltd.
30 Woodbourne Avenue
Hamilton HM 08
Bermuda
NOTICE OF ANNUAL
GENERAL MEETING
TO THE SHAREHOLDERS OF ASSURED GUARANTY LTD.:
The Annual General Meeting of Assured Guaranty Ltd., which we refer to as AGL, will be held on Wednesday, May 4, 2022, at 8:00 a.m. London Time, at 6 Bevis Marks, London, EC3A 7BA, United Kingdom. The Annual General Meeting is being held for the following purposes:
1.To elect our board of directors;
2.    To approve, on an advisory basis, the compensation paid to AGL’s named executive officers;
3.    To appoint PricewaterhouseCoopers LLP as AGL’s independent auditor for the fiscal year ending December 31, 2022, and to authorize the Board of Directors, acting through its Audit Committee, to set the fees for the independent auditor;
4.    To direct AGL to vote for directors of, and the appointment of the independent auditor for, its subsidiary Assured Guaranty Re Ltd.; and
5.    To transact such other business, if any, as lawfully may be brought before the meeting.
Shareholders of record are being mailed a Notice Regarding the Availability of Proxy Materials on or around March 23, 2022, which provides them with instructions on how to access the proxy materials and our 2021 annual report on the internet, and if they prefer, how to request paper copies of these materials.
At this writing, governments continue to adjust various travel and gathering restrictions in response to the COVID-19 pandemic. In the event we postpone or change the date, time or location of our Annual General Meeting as a result of COVID-19, we will post the revised meeting information on our website at www.assuredguaranty.com/annualmeeting as soon as possible after changing the date, time and place for the postponed meeting. We will also promptly issue a press release that we will make available on our website at www.assuredguaranty.com/annualmeeting and file with the Securities and Exchange Commission (which we refer to as the SEC) as definitive additional proxy material. Therefore, prior to and on the date of the Annual General Meeting, please visit our website or the SEC’s website (www.sec.gov) to determine if there has been any change to the date, time or location of our Annual General Meeting. If you wish to receive a physical copy of any such press release, please contact our Secretary at generalcounsel@agltd.com or (441) 279-5725.
Only shareholders of record, as shown by the transfer books of AGL, at the close of business on March 11, 2022, are entitled to notice of, and to vote at, the Annual General Meeting.
REGISTERED SHAREHOLDERS WHO HOLD OUR SHARES DIRECTLY MAY VOTE UP UNTIL 12:00 NOON EASTERN DAYLIGHT TIME ON MAY 3, 2022. BENEFICIAL SHAREHOLDERS MUST SUBMIT THEIR VOTING INSTRUCTIONS SO THAT THEIR BROKERS WILL BE ABLE TO VOTE BY 11:59 P.M. EASTERN DAYLIGHT TIME ON MAY 2, 2022. EMPLOYEE SHAREHOLDERS WHO PARTICIPATE IN THE ASSURED GUARANTY EMPLOYEE STOCK PURCHASE PLAN MAY VOTE UP UNTIL 11:59 P.M. EASTERN DAYLIGHT SAVINGS TIME ON APRIL 29, 2022.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL GENERAL MEETING IN PERSON OR BY PROXY, AND REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE VOTE AS PROMPTLY AS POSSIBLE VIA THE INTERNET OR BY TELEPHONE. ALTERNATIVELY, IF YOU HAVE REQUESTED WRITTEN PROXY MATERIALS, PLEASE SIGN, DATE AND RETURN THE PROXY CARD IN THE RETURN ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT. FOR FURTHER INFORMATION CONCERNING THE INDIVIDUALS NOMINATED AS DIRECTORS, THE PROPOSALS BEING VOTED UPON, USE OF THE PROXY AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE ATTACHED PROXY STATEMENT.
By Order of the Board of Directors,
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Ling Chow
Secretary



 
 
 
TABLE OF CONTENTS
  
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SUMMARY ____________________________
     1  
     3  
Overview ______________________________
     3  
How Are Directors Nominated? _____________
     4  
Committees of the Board _________________    
     5  
     7  
     9  
     9  
Compensation Committee Interlocking and
Insider Participation ____________________
     10  
What Is Our Related Person Transactions Approval Policy and What Procedures Do We Use To Implement It? ________________
     10  
What Related Person Transactions Do We
Have? ______________________________
     11  
Delinquent Section 16(a) Reports ___________
     11  
     12  
     14  
     16  
How Much Stock Is Owned By Directors,
Nominees and Executive Officers? ________
     16  
Which Shareholders Own More Than 5% of
Our Common Shares? __________________
     17  
ELECTION OF  DIRECTORS _____________
     18  
     27  
     30  
Compensation Discussion and Analysis ______
     30  
CD&A Roadmap _______________________
     30  
Summary _____________________________
     31  
Executive Compensation Program Structure and Process _________________________
     36  
CEO Performance Review _______________
     48  
Other Named Executive Officer
Compensation Decisions ________________
     56  
Separation Agreement 59
2021 Executive Compensation Conclusion ___
     60  
Compensation Governance ______________
     60  
Post-Employment Compensation __________
     64  
Tax Treatment _________________________
     64  
Non-GAAP Financials Measures ___________
     65  
Compensation Committee Report ___________
     66  
Summary Compensation Table _____________
     67  
Employment Agreements _________________
     68  
Perquisite Policy ________________________
     68  
Severance Policy _______________________
     68  
Employee Stock Purchase Plan ____________
     68  
Indemnification Agreements _______________      68  
2021 Grants of Plan-Based Awards _________
     69  
Outstanding Equity Awards ________________
     71  
2021 Stock Vested ______________________
     72  
Non-Qualified Deferred Compensation _______
     73  
Potential Payments Upon Termination or Change in Control ______________________
     73  
CEO Pay Ratio _________________________
     75  
Non-Qualified Retirement Plans ____________
     75  
Incentive Plans _________________________
     76  
     77  
ADVISORY APPROVAL OF EXECUTIVE COMPENSATION ______________________
     78  
APPOINTMENT OF INDEPENDENT
AUDITOR _____________________________
     79  
Independent Auditor Fee Information ________
     79  
Pre-Approval Policy of Audit and Non-Audit
Services ______________________________
     80  
PROPOSALS CONCERNING OUR SUBSIDIARY, ASSURED GUARANTY RE LTD. ______________________________
     81  
Proposal 4.1-Election of AG Re Directors _____
     81  
Proposal 4.2-Appointment of AG Re Auditor ___
     83  
     84  
How do I submit a proposal for inclusion in
next year’s proxy material? _______________
     84  
How do I submit a proposal or make a nomination at an Annual General Meeting? __
     84  
     85  
OTHER MATTERS _____________________
     90  




PROXY STATEMENT
Assured Guaranty Ltd.    March 23, 2022
SUMMARY
This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider before voting. For more complete information about the following topics, please review the complete proxy statement and the Annual Report on Form 10-K of Assured Guaranty Ltd. (which we refer to as AGL, we, us or our; we use Assured Guaranty, our Company or the Company to refer to AGL together with its subsidiaries).
We intend to begin distribution of the Notice Regarding the Availability of Proxy Materials to shareholders on or about March 23, 2022.
ANNUAL GENERAL MEETING OF SHAREHOLDERS
Time and Date    8:00 a.m. London time, May 4, 2022
   
Place   
6 Bevis Marks
London, EC3A 7BA
United Kingdom
   
Record Date    March 11, 2022
   
Voting    Shareholders as of the record date are entitled to vote. Each Common Share is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. Registered shareholders who hold our shares directly may vote up until 12:00 Noon Eastern Daylight Savings Time on May 3, 2022. Beneficial owners must submit their voting instructions so that their brokers will be able to vote by 11:59 p.m. Eastern Daylight Savings Time on May 2, 2022. Employee shareholders who participate in the Assured Guaranty Employee Stock Purchase Plan may vote up until 11:59 p.m. Eastern Daylight Savings Time on April 29, 2022. In spite of those deadlines, holders who attend the Annual General Meeting will be able to vote in person.
Agenda Item
Board Vote
Recommendation
Page Reference
(for More Detail)
Election of directors For each director nominee Page 18
Approval, on an advisory basis, of the compensation paid to AGL’s named executive officers
For
Page 78
Appointment of PricewaterhouseCoopers as AGL’s independent auditor for 2022 and authorization of the Board of Directors, acting through its Audit Committee, to set the fees for the independent auditor
For
Page 79
Direction of AGL to vote for directors of, and the appointment of the independent auditor of, AGL’s subsidiary, Assured Guaranty Re Ltd.
For each director nominee
and for the independent
auditor 
Page 81
We will also transact any other business that may properly come before the meeting.
If we postpone or change the date, time or location of our Annual General Meeting as a result of travel or gathering restrictions related to COVID-19, we will post the revised meeting information on our website at www.assuredguaranty.com/annualmeeting as soon as possible after changing the date, time and place for the postponed meeting. We will also promptly issue a press release that we will make available on our website at www.assuredguaranty.com/annualmeeting and file with the SEC as definitive additional proxy material. Therefore, prior to and on the date of the Annual General Meeting, please visit our website or the SEC’s website (www.sec.gov) to determine if there has been any change to the date, time or location of our Annual General Meeting. If you wish to receive a physical copy of any such press release, please contact our Secretary at generalcounsel@agltd.com or (441) 279-5725.
This proxy statement makes a number of references to our website. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this proxy statement.
1 Assured Guaranty 2022 Proxy Statement


 
SUMMARY DIRECTOR INFORMATION
The following table provides summary information about each director nominee, including their current committee assignments. Each director nominee will be elected for a one-year term by a majority of votes cast.
 NOMINEE DIRECTOR SINCE PRINCIPAL OCCUPATION
COMMITTEES
A
C
ES
F1
NG
RO
E
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Francisco L. Borges 70  2007
Partner of Ares Management Corporation and Co-Head of Ares Secondary Solutions
 
 
 
 
 
 
 
 
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G. Lawrence
Buhl
75 2004
Former Regional Director for
Insurance Services, Ernst &
Young LLP
 
 
 
 
 
 
 
 
 
 
 
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Dominic J. Frederico 69 2004 President and Chief Executive
Officer, Assured Guaranty Ltd.
 
 
 
 
 
 
 
 
 
 
 
 
 
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Bonnie L. Howard 68 2012
Former Chief Auditor and Global
Head of Control and Emerging Risk, Citigroup
 
   
 
 
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Thomas W. Jones 72 2015 Founder and Senior Partner of TWJ Capital, LLC
 
   
 
   
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Patrick W. Kenny 79 2004 Former President and Chief
Executive Officer, International Insurance Society
 
 
 
 
 
 
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Alan J. Kreczko 70 2015 Former Executive Vice President
and General Counsel of The
Hartford Financial Services
Group, Inc.
 
 
 
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Simon W. Leathes 74 2013 Former Independent
non-executive director of
HSBC Bank plc
     
 
 
 
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Michelle McCloskey 60 2021 Former President of the Americas of Man Group and President of Man FRM
 
 
 
       
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Yukiko Omura 66 2014 Former Executive Vice President and Chief Executive Officer of the
Multilateral Investment Guarantee Agency of the World Bank Group
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Lorin P.T. Radtke 53 2021 Co-founder and Partner, M Seven 8
 
 
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Courtney C. Shea 61 2021 Former Managing Member, Columbia Capital Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2021 Meetings  4 5 4 4 4 4 0
:  Chair; : Member; A: Audit; C: Compensation; ES: Environmental and Social Responsibility; F: Finance; NG: Nominating and Governance; RO: Risk Oversight; E: Executive.
1 Michael O'Kane, the current Chair of the Finance Committee, will retire upon the completion of his 2021 -2022 term.
2 Assured Guaranty 2022 Proxy Statement


CORPORATE GOVERNANCE
OVERVIEW
THE BOARD OF DIRECTORS
Our Board of Directors maintains strong corporate governance policies.
The Board and management have reviewed the rules of the SEC and the New York Stock Exchange (which we refer to as the NYSE) listing standards regarding corporate governance policies and processes, and we are in compliance with the rules and listing standards.
We have adopted Corporate Governance Guidelines covering issues such as director qualification standards (including independence), director responsibilities, Board self-evaluations, and executive sessions of the Board.
Our Corporate Governance Guidelines contain our Categorical Standards for Director Independence.
We have adopted a Global Code of Ethics for our employees and directors and charters for each Board committee.
The full text of our Corporate Governance Guidelines, our Global Code of Ethics and each Board committee charter, are available on our website at www.assuredguaranty.com/governance. In addition, you may request copies of the Corporate Governance Guidelines, the Global Code of Ethics and the committee charters by contacting our Secretary via:
 
Telephone    (441) 279-5725
Facsimile    (441) 279-5701
e-mail    generalcounsel@agltd.com
MEETINGS OF THE BOARD
Our Board of Directors oversees our business and monitors the performance of management. The directors keep themselves up-to-date on our Company by discussing matters with Mr. Frederico, who is our Chief Executive Officer (and whom we refer to as our CEO), other key executives and our principal external advisors, such as outside auditors, outside legal counsel, investment bankers and other consultants, by reading the reports and other materials that we send them regularly and by participating in Board and committee meetings.
The Board usually meets four times per year in regularly scheduled meetings, but will meet more often if necessary. During 2021, the Board met four times. All but one of our directors, Michelle McCloskey, attended at least 75% of the aggregate number of meetings of the Board and committees of the Board of which they were a member held while they were in office during the year ended December 31, 2021. Ms. McCloskey was elected to the Board effective May 5, 2021, and so was eligible to attend only two of the sets of Board and committee meetings held in 2021. She missed only one set of Board and committee meetings, due to illness.
DIRECTOR INDEPENDENCE
In February 2022, our Board determined that, other than Mr. Frederico, all of our directors are independent under the listing standards of the NYSE. These independent directors constitute substantially more than a majority of our Board. In making its determination of independence, the Board applied its Categorical Standards for Director Independence and determined that no other material relationships existed between our Company and these directors. A copy of our Categorical Standards for Director Independence is available as part of our Corporate Governance Guidelines, which are available on our website at www.assuredguaranty.com/governance. In addition, as part of the independence determination, our Board monitors the independence of Audit and Compensation Committee members under rules of the SEC and NYSE listing standards that are applicable to members of the Audit Committee and Compensation Committee.
As part of its independence determinations, the Board considered the other directorships held by the independent directors and determined that none of these directorships constituted a material relationship with our Company.
DIRECTOR EXECUTIVE SESSIONS
The independent directors meet at regularly scheduled executive sessions without the participation of management. The Chair of the Board is the presiding director for executive sessions of independent directors.

3 Assured Guaranty 2022 Proxy Statement


OTHER CORPORATE GOVERNANCE HIGHLIGHTS
Our Board has a substantial majority of independent directors.
All members of the Audit, Compensation, Nominating and Governance, Finance, Environmental and Social Responsibility, and Risk Oversight Committees are independent directors.
Our Audit Committee recommends to the Board, which recommends to the shareholders, the annual appointment of our independent auditor. Each year our shareholders are asked to authorize the Board, acting through its Audit Committee, to determine the compensation of, and the scope of services performed by, our independent auditor. The Audit Committee also has the authority to retain outside advisors.
No member of our Audit Committee simultaneously serves on the audit committee of more than one other public company.
Our Compensation Committee has engaged a compensation consultant, Frederic W. Cook & Co., Inc., which we refer to as FW Cook, to assist it in evaluating the compensation of our CEO, based on corporate goals and objectives and, with the other independent directors, setting his compensation based on this evaluation. FW Cook has also assisted us in designing our executive compensation program. The Compensation Committee has conducted an assessment of FW Cook’s independence and has determined that FW Cook does not have any conflict of interest. Our Nominating and Governance Committee also engages FW Cook to assist it in evaluating the compensation of our independent directors.
We established an Executive Committee to exercise certain authority of the Board in the management of company affairs between regularly scheduled meetings of the Board when it is determined that a specified matter should not be postponed to the next scheduled meeting of the Board. Our Executive Committee did not meet in 2021.
We have adopted a Global Code of Ethics that sets forth basic principles to guide our day-to-day activities. The Global Code of Ethics addresses, among other things, conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of company assets, compliance with laws and regulations, including insider trading laws, and reporting illegal or unethical behavior. The full text of our Global Code of Ethics is available on our website at www.assuredguaranty.com/governance.
In addition to AGL’s quarterly Board meetings, our Board has an annual business review meeting to assess specific areas of our Company’s operations and to learn about general trends affecting the financial guaranty and asset management industries. We also provide our directors with the opportunity to attend continuing education programs.
We established an Environmental and Social Responsibility Committee in May 2019, which began meeting in August 2019. Prior to the establishment of the Environmental and Social Responsibility Committee, our Nominating and Governance Committee was responsible for many such matters.
We adopted an Environmental Policy and a Statement on Climate Change in February 2019 and, in February 2020, we adopted a Human Rights Statement. In February 2021 we adopted a Diversity and Inclusion Policy. The current versions of these statements are available on our website at www.assuredguaranty.com/governance.
HOW ARE DIRECTORS NOMINATED?
In accordance with its charter, the Nominating and Governance Committee identifies potential nominees for directors from various sources. The Nominating and Governance Committee:
Reviews the qualifications of potential nominees to determine whether they might be good candidates for Board of Directors membership
Reviews the potential nominees’ judgment, experience, independence, understanding of our business or other related industries and such other factors as it determines are relevant in light of the needs of the Board of Directors and our Company
Selects qualified candidates and reviews its recommendations with the Board of Directors, which will decide whether to nominate the person for election to the Board of Directors at an Annual General Meeting of Shareholders (which we refer to as an Annual General Meeting). Between Annual General Meetings, the Board, upon the recommendation of the Nominating and Governance Committee, can fill vacancies on the Board by appointing a director to serve until the next Annual General Meeting.
The Nominating and Governance Committee has the authority to retain search firms to be used to identify director candidates and to approve the search firm’s fees and other retention terms. The Nominating and Governance Committee may also retain other advisors.
We believe that diversity among members of the Board is an important consideration and is critical to the Board’s ability to perform its duties and various roles. Accordingly, in recommending nominees, the Board considers a wide range of individual perspectives in addition to diversity in professional experience and training. In 2021, the Board amended our Corporate Governance Guidelines to specify that the Nominating and Governance Committee will include, and will direct any director search firm that may be retained to
4 Assured Guaranty 2022 Proxy Statement


identify nominees for director, to include highly qualified candidates who reflect a variety of backgrounds (including in respect of gender, race or ethnicity) in the pool of potential candidates being considered.
Our Corporate Governance Guidelines address diversity of experience, requiring the Nominating and Governance Committee to review annually the skills and attributes of Board members within the context of the current make-up of the full Board. The guidelines also provide that Board members should have individual backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve our governance and strategic needs. The Nominating and Governance Committee will consider Board candidates on the basis of a range of criteria, including broad-based business knowledge and contacts, prominence and sound reputation in their fields as well as having a global business perspective and commitment to good corporate citizenship. Our Corporate Governance Guidelines specify that directors should represent all shareholders and not any special interest group or constituency. The guidelines additionally specify that directors should be able and prepared to provide wise and thoughtful counsel to top management on the full range of potential issues facing us. Directors must possess the highest personal and professional integrity. Directors must have the time necessary to fully meet their duty of due care to the shareholders and be willing to commit to service over the long term.
The Nominating and Governance Committee annually reviews its own performance. In connection with such evaluation, the Nominating and Governance Committee assesses whether it effectively nominates candidates for director in accordance with the above described standards specified by the Corporate Governance Guidelines.
Our Board is currently composed of individuals from different disciplines, including lawyers, accountants and individuals who have industry, finance, executive and international experience, and is composed of both men and women of different races and ethnicities, and citizens of the United States, the United Kingdom and Japan. See each nominee’s biography appearing later in this proxy statement for a description of the specific experience that each such individual brings to our Board.
The Nominating and Governance Committee will consider a shareholder’s recommendation for director but has no obligation to recommend such candidate for nomination by the Board of Directors. Assuming that appropriate biographical and background material is provided for candidates recommended by shareholders, the Nominating and Governance Committee will evaluate those candidates by following substantially the same process and applying substantially the same criteria as for candidates recommended by other sources. If a shareholder has a suggestion for a candidate for election, the shareholder should send it to: Secretary, Assured Guaranty Ltd., 30 Woodbourne Avenue, Hamilton HM 08, Bermuda. No person recommended by a shareholder will become a nominee for director and be included in a proxy statement unless the Nominating and Governance Committee recommends, and the Board approves, such person.
If a shareholder desires to nominate a person for election as director at an Annual General Meeting, that shareholder must comply with Article 14 of AGL’s Bye-Laws, which requires notice no later than 90 days prior to the anniversary date of the immediately preceding Annual General Meeting. This time period has passed with respect to the 2022 Annual General Meeting. With respect to the 2023 Annual General Meeting, AGL must receive such written notice on or prior to February 3, 2023. Such notice must describe the nomination in sufficient detail to be summarized on the agenda for the meeting and must set forth:
the shareholder’s name as it appears in AGL’s books
a representation that the shareholder is a record holder of AGL’s Common Shares and intends to appear in person or by proxy at the meeting to present such proposal
the class and number of Common Shares beneficially owned by the shareholder
the name and address of any person to be nominated
a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons, naming such other person or persons, pursuant to which the nomination or nominations are to be made by the shareholder
such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the SEC’s proxy regulations
the consent of each nominee to serve as a director of AGL, if so elected
COMMITTEES OF THE BOARD
The Board of Directors has established an Audit Committee, a Compensation Committee, an Environmental and Social Responsibility Committee, a Finance Committee, a Nominating and Governance Committee, a Risk Oversight Committee and an Executive Committee. All of the Board committees other than the Executive Committee are composed entirely of directors who are independent of our Company and management, as defined by the NYSE listing standards and as applied by the Board. Mr. O'Kane, who currently serves as chair of the Finance Committee and a member of the Audit and Nominating and Governance Committees, will retire upon the completion of his 2021-2022 term.
5 Assured Guaranty 2022 Proxy Statement


  The Audit Committee
Chair: Bonnie L. Howard / 4 meetings during 2021
  Other Audit Committee members: G. Lawrence Buhl, Thomas W. Jones, Michelle McCloskey, Michael T. O'Kane, Courtney C. Shea
The Audit Committee provides oversight of the integrity of our Company’s financial statements and financial reporting process, our compliance with legal and regulatory requirements (including cybersecurity and data privacy requirements), the system of internal controls, the audit process, the performance of our internal audit program and the performance, qualification and independence of the independent auditor. The Audit Committee is also responsible for the oversight of Company risks related to (i) financial reporting, accounting policies and reserving, (ii) legal, regulatory and compliance matters, (iii) information technology, which we refer to as IT, (including cybersecurity and data privacy), (iv) workouts, emerging events, and counterparties, (v) outsourcing and people, and (vi) business continuity planning.
The Audit Committee is composed entirely of directors who are independent of our Company and management, as defined by the NYSE listing standards and as applied by the Board.
The Board has determined that each member of the Audit Committee satisfies the financial literacy requirements of the NYSE and five of the six members are audit committee financial experts, as that term is defined under Item 407(d) of the SEC’s Regulation S-K. For additional information about the qualifications of the Audit Committee members, see their respective biographies set forth in “Proposal No. 1: Election of Directors.”
  The Compensation Committee
Chair: Thomas W. Jones / 5 meetings during 2021
  Other Compensation Committee members: G. Lawrence Buhl, Bonnie L. Howard, Patrick W. Kenny
The Compensation Committee has responsibility for evaluating the performance of our CEO and our senior leadership team and determining executive compensation in conjunction with the independent directors. The Compensation Committee also works with the Nominating and Governance Committee and our CEO on succession planning. The Compensation Committee is also responsible for the oversight of Company risks related to people, succession planning and compensation.
The Compensation Committee is composed entirely of directors who are independent of our Company and management, as defined by the NYSE listing standards and as applied by the Board.
The Compensation Committee’s meetings included discussions with FW Cook to review executive compensation trends and comparison group compensation data and to evaluate the risk of our executive compensation program.
  The Environmental and Social Responsibility Committee
Chair: Alan J. Kreczko / 4 meetings during 2021
  Other Environmental and Social Responsibility Committee members: G. Lawrence Buhl, Michelle McCloskey, Yukiko Omura, Courtney C. Shea
The Environmental and Social Responsibility Committee provides oversight and review of the Company’s significant strategies, policies and practices regarding environmental and social responsibility issues. The Environmental and Social Responsibility Committee focuses on four principal subject areas: (i) environmental risks, including climate change related risks, opportunities, and stewardship; (ii) corporate social responsibility, including community engagement and corporate philanthropy; (iii) aspects of human capital management, including diversity and inclusion, training and development, and employee engagement; and (iv) related stakeholder engagement.
  The Finance Committee
Michael T. O'Kane / 4 meetings during 2021
  Other Finance Committee members: Alan J. Kreczko, Simon W. Leathes, Yukiko Omura, Lorin P.T. Radtke
The Finance Committee of the Board of Directors oversees management’s investment of our Company’s investment portfolio, including in alternative investments, and is responsible for oversight of Company risks related to capital, liquidity, investments, financial market conditions, foreign currency, and rating agencies. The Finance Committee also oversees, and makes recommendations to the Board with respect to, our capital structure, dividends, financing arrangements, investment guidelines, potential alternative investments and any corporate development activities. Mr. O'Kane, chair of the Finance Committee, will retire upon the completion of his 2021-2022 term.
  The Nominating and Governance Committee
Chair: Francisco L. Borges / 4 meetings during 2021
  Other Nominating and Governance Committee members: Bonnie L. Howard, Thomas W. Jones, Patrick W. Kenny, Michael T. O'Kane
The responsibilities of the Nominating and Governance Committee include identifying individuals qualified to become Board members, recommending director nominees to the Board and developing and recommending corporate governance guidelines, as well as the oversight of Company risks related to board qualification, corporate structure, governance, regulatory compliance and people. The Nominating and Governance Committee also has responsibility to review and make recommendations to the full Board regarding director compensation. In addition to general corporate governance matters, the Nominating and Governance Committee assists the Board and the Board committees in their self-evaluations. The Nominating and Governance Committee is composed entirely of
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directors who are independent of our Company and management, as defined by the NYSE listing standards and as applied by the Board.  
  The Risk Oversight Committee
Chair: Simon W. Leathes / 4 meetings during 2021
  Other Risk Oversight Committee members: Alan J. Kreczko, Yukiko Omura, Lorin P.T. Radtke
The Risk Oversight Committee oversees management’s establishment and implementation of standards, controls, limits, guidelines and policies relating to risk appetite, risk assessment and enterprise risk management. The Risk Oversight Committee focuses on the underwriting, surveillance and workout of credit risks as well as the assessment, management and oversight of other Company enterprise risks across our insurance and asset management segments and corporate division, including, but not limited to, financial, legal, operational (including IT, cybersecurity, data privacy and vendor management) and other risks concerning our Company’s governance, reputation and ethical standards.
  The Executive Committee
Chair: Francisco L. Borges / No meetings during 2021
  Other Executive Committee members: Dominic J. Frederico, Patrick W. Kenny, Simon W. Leathes
The Executive Committee was established to have, and to exercise, certain of the powers and authority of the Board in the management of the business and affairs of our Company between regularly scheduled meetings of the Board when, in the opinion of a quorum of the Executive Committee, a matter should not be postponed to the next scheduled meeting of the Board. The Executive Committee’s authority to act is limited by our Company’s Bye-Laws, rules of the NYSE and applicable law and regulation and the Committee’s charter.
HOW ARE DIRECTORS COMPENSATED?
Our independent directors receive an annual retainer of $265,000 per year. We pay $145,000 of the retainer in restricted stock and $120,000 of the retainer in cash. A director also may elect to receive any or all of the cash portion of their annual retainer (plus the additional cash amounts described below) in restricted stock.
The restricted stock vests on the day immediately prior to the next Annual General Meeting following the grant of the stock. However, if, prior to such vesting date, either (i) a change in control (as defined in the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan, as amended) of Assured Guaranty Ltd. occurs before the director terminates service on the Board or (ii) the director terminates service on the Board as a result of such director’s death or disability, then the restricted stock will vest on the date of such change in control or the date of the director’s termination of service, whichever is applicable. Grants of restricted stock receive cash dividends and have voting rights; the cash dividends accrue during the vesting period and are paid upon vesting.
Our share ownership guidelines require that, before being permitted to dispose of any shares acquired as compensation from our Company, each independent director own Common Shares with a market value of at least $600,000, which amount is five times the maximum cash portion of the annual director retainer (exclusive of committee fees). Once a director has reached the share ownership guideline, for so long as he or she serves on the Board, such director may not dispose of any Common Shares if such disposition would cause the director to be below the share ownership guideline. Common Shares that had been restricted but subsequently vested in addition to purchased Common Shares count toward the share ownership guideline. Our three newer Board members (Ms. McCloskey, Mr. Radtke and Ms. Shea, who each joined the Board in May 2021) are accumulating Common Shares toward their ownership goals, while the rest of our independent directors meet our share ownership guidelines.
In addition to the annual retainer described above:
The non-executive Chair of the Board receives an annual retainer of $225,000 in recognition of the strategic role he plays and the time commitment involved. The Chair of the Board has elected not to receive any fees for serving as a member or chair of a board committee.
The chair of each committee of the Board other than the Executive Committee receives an additional $30,000 annual retainer.
Members, other than the chair of the committee, of each committee of the Board other than the Executive Committee receive an additional $15,000 annual retainer.
The Company generally will not pay a fee for attendance at Board or committee meetings, although the Chair of the Board has the discretion to pay attendance fees of $2,000 for extraordinary or special meetings. There were no extraordinary meetings of the Board in 2021. We do not pay a fee for being a member, or attending meetings, of the Executive Committee.
In 2021, our Nominating and Governance Committee engaged FW Cook to conduct a comprehensive review and assessment of our independent director compensation program. FW Cook reviews this program periodically. FW Cook evaluated our director compensation by comparing it against the compensation awarded to directors of companies in our executive compensation comparison group as constituted by FW Cook in 2020, and which we refer to as the 2020 executive compensation comparison group. FW Cook also looked at a broader market segment using data from FW Cook’s 2020 Director Compensation Report, the most recent year for which
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such information was available. FW Cook found that the structure of our director compensation program was generally consistent with peer 2020 executive compensation comparison group policy and best practice design as recognized by the proxy advisory firms and investors, noting:
the absence of meeting fees to simplify program administration and avoid the implication that there is additional pay for meeting attendance, which is an expected part of Board service
the use of committee member retainers to differentiate compensation among directors based on workload
the vesting of annual restricted stock awards over a one-year period, which protects against the possibility of director entrenchment
the payment of additional retainers to the board and committee leadership to recognize the additional responsibilities and time commitment associated with these roles
our limited benefits (we provide a Company match of up to $15,000 per director for contributions to charitable organizations of the director’s choice)
a meaningful and robust stock ownership guideline
No changes were made to our independent director compensation program in 2021, 2020 or 2019.
FW Cook found in 2021 that the aggregate cost of our independent director compensation program approximates the 75th percentile of our 2020 executive compensation comparison group. FW Cook also found that, before considering the instances where our directors have chosen to receive a portion of their cash compensation in our common shares, our total per director compensation has a somewhat heavier weighting on cash compensation than that of our 2020 executive compensation comparison group.
DIRECTOR COMPENSATION
The following table sets forth our 2021 independent director compensation, including the compensation for the directors’ committee assignments as of such date.
  Name Fees Earned or
Paid in Cash
Stock
Awards(1)
All Other
Compensation(2)
Total
  Francisco L. Borges(3)
$345,000 $145,000 $12,707 $502,707
  G. Lawrence Buhl $165,000 $145,000 $16,760 $326,760
  Bonnie L. Howard $180,000 $145,000 $16,760 $341,760
  Thomas W. Jones $180,000 $145,000 $16,760 $341,760
  Patrick W. Kenny(4)
$150,000 $145,000 $16,957 $311,957
  Alan J. Kreczko(5)
$180,000 $145,000 $16,760 $341,760
  Simon W. Leathes(6)
$198,840 $145,000 $7,521 $351,361
Michelle McCloskey(7)
$150,000 $145,000 —  $295,000
  Michael T. O’Kane $180,000 $145,000 $12,707 $337,707
Yukiko Omura $165,000 $145,000 —  $310,000
Lorin P.T. Radtke $150,000 $145,000 $10,000 $305,000
Courtney C. Shea $150,000 $145,000 $15,000 $310,000
(1)    Represents grant date fair value, rounded to the nearest $1,000.
(2)    Other compensation consists of matching gift donations to eligible charities paid in 2021 or paid in early 2022 for donations made in 2021 and U.K. personal tax return preparation fees paid in 2021 or paid in early 2022 for services performed in 2021.
(3)    Mr. Borges agreed to forgo an additional fee as the Chair of the Nominating and Governance Committee due to the substantial overlap between that position and his position as the Chair of the Board. Mr. Borges also agreed to forgo additional fees for his work on executive compensation in conjunction with the Compensation Committee. Mr. Borges elected to receive the entire cash component of his compensation as restricted stock.
(4)    Mr. Kenny elected to receive $30,000 of the cash component of his compensation as restricted stock and the remaining $120,000 in cash.
(5)    Mr. Kreczko elected to receive the entire cash component of his compensation as restricted stock.
(6)    The fees for Mr. Leathes include £25,000 for service in 2020 as an independent director of Assured Guaranty UK Limited, our U.K. insurance subsidiary. Mr. Leathes retired from such board in December 2020. As of December 31, 2021, £25,000 was approximately $33,840.
(7)    Ms. McCloskey elected to receive $5,000 of the cash component of her compensation as restricted stock and the remaining $145,000 in cash.
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The following table shows information related to independent director equity awards outstanding on December 31, 2021:  
  Name
Unvested
Restricted
Stock(1)
Francisco L. Borges 9,544
G. Lawrence Buhl 2,824
Bonnie L. Howard 2,824
Thomas W. Jones 2,824
Patrick W. Kenny 3,409
Alan J. Kreczko 6,330
Simon W. Leathes 2,824
Michelle McCloskey 2,922
Michael T. O’Kane 2,824
Yukiko Omura 2,824
Lorin P.T. Radtke 2,824
Courtney C. Shea 2,824
(1)    Vests one day prior to the 2022 Annual General Meeting.
WHAT IS OUR BOARD LEADERSHIP STRUCTURE?
Our current Chair of the Board is Francisco L. Borges. The position of CEO is held by Dominic Frederico.
While our Board has no fixed policy with respect to combining or separating the offices of Chair of the Board and CEO, those two positions have been held by separate individuals since our 2004 initial public offering. We believe this is the appropriate leadership structure for us at this time. Mr. Borges and Mr. Frederico have had an excellent working relationship, which has continued to permit Mr. Frederico to focus on running our business and Mr. Borges to focus on Board matters, including oversight of our management. Mr. Borges and Mr. Frederico collaborate on setting agendas for Board meetings to be sure that the Board discusses the topics necessary for its oversight of the management and affairs of our Company. As Chair of the Board, Mr. Borges sets the final Board agenda and chairs Board meetings, including executive sessions at which neither our CEO nor any other member of management is present. The Chair of the Board also chairs our Annual General Meetings.
HOW DOES THE BOARD OVERSEE RISK?
Our Board’s role in risk oversight is consistent with our leadership structure, with our CEO and other members of our senior leadership team having responsibility for assessing and managing risk exposure and the Board and its committees providing oversight in connection with these activities. Our Company’s policies and procedures relating to risk assessment and risk management are overseen by our Board. Our Board employs an enterprise-wide approach to risk management that supports our Company’s business plans at a reasonable level of risk. Risk assessment and risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for that company. Our Board annually approves our business plan, factoring risk management into account, and also approves our Company’s risk appetite statement, which articulates our Company’s tolerance for risk and describes the general types of risk that our Company accepts or attempts to avoid. The involvement of our Board in setting our business strategy is a key part of its assessment of management’s risk tolerance and also a determination of what constitutes an appropriate level of risk for us.
While our Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of our Board also have responsibility for risk assessment and risk management. As discussed under “Committees of the Board,” our Board has created a Risk Oversight Committee that oversees the standards, controls, limits, underwriting guidelines and policies that our Company establishes and implements in respect of credit underwriting and risk management. It focuses on management’s assessment and management of both (i) credit risks and (ii) other enterprise risks, including, but not limited to, market, financial, legal and operational risks (including cybersecurity and data privacy risks), and risks relating to our reputation and ethical standards. Our Risk Oversight Committee and Board pay particular attention to credit risks we assume when we issue financial guaranties or engage in strategic transactions and to risks related to our asset management segment. In addition, the Audit Committee of our Board of Directors is responsible for, among other matters, reviewing policies and processes related to the evaluation of risk assessment and risk management, including our major financial risk exposures and the steps management has taken to monitor and control such exposures. It also oversees cybersecurity and data privacy risks and reviews compliance with legal and regulatory requirements. The Finance Committee of our Board of Directors oversees the investment of our Company’s investment portfolio (including alternative investments)
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and our Company’s capital structure, financing arrangements, rating agency matters, and any corporate development activities in support of our Company’s financial plan. The Nominating and Governance Committee of our Board of Directors oversees risk at our Company by developing appropriate corporate governance guidelines and identifying qualified individuals to become board members. The Environmental and Social Responsibility Committee oversees risks related to the environment, sustainability and social responsibility, while each of our other Board committees have responsibility for risk assessment of such risks to the extent within their purview.
As part of its oversight of executive compensation, our Compensation Committee reviews compensation risk. Our Compensation Committee oversaw the performance of a risk assessment of our employee compensation program to determine whether any of the risks arising from our compensation program are reasonably likely to have a material adverse effect on us. Since January 2011, our Compensation Committee has retained FW Cook to perform an annual review of each of our compensation plans and identify areas of risk and the extent of such risk. Our Compensation Committee directs that our Chief Risk Officer work with FW Cook to perform such risk assessment and to be sure that compensation risk is included in our enterprise risk management system. In conducting this assessment, from time-to-time, most recently in February 2018, FW Cook performs a comprehensive systemic, qualitative review of all of our incentive compensation programs and reviews its findings with our Chief Risk Officer for completeness and accuracy. FW Cook seeks to identify any general areas of risk or potential for unintended consequences that exist in the design of our compensation programs and to evaluate our incentive plans relative to our enterprise risks to identify potential areas of concern, if any.
FW Cook updates its compensation risk assessment annually, and did so most recently in February 2022, taking into account the changes the Compensation Committee made in connection with its consideration of incentive compensation for the 2021 performance year, which changes included amendments to our recoupment policy and implementation of compensation arrangements for certain teams at Assured Investment Management, which we refer to as AssuredIM. FW Cook concluded that our incentive plans are well-aligned with sound compensation design principles and do not encourage behaviors that would create material risk for our Company. Our Chief Risk Officer reviewed their findings and agreed with their conclusion. Based on this update, our Compensation Committee continued to find that there is an appropriate balance between the risks inherent in our business and our compensation program.
COMPENSATION COMMITTEE INTERLOCKING AND INSIDER PARTICIPATION
The Compensation Committee of our Board of Directors has responsibility for determining the compensation of our executive officers. None of the members of our Compensation Committee is a current or former officer or employee of our Company. No executive officer of our Company serves on the compensation committee of any company that employs any member of our Compensation Committee.
WHAT IS OUR RELATED PERSON TRANSACTIONS APPROVAL POLICY AND WHAT PROCEDURES DO WE USE TO IMPLEMENT IT?
Through our committee charters, we have established review and approval policies for transactions involving our Company and related persons, with our Nominating and Governance Committee taking the primary approval responsibility for transactions with our executive officers and directors and our Audit Committee taking the primary approval responsibility for transactions with 5% shareholders. No member of these committees who has an interest in a transaction being reviewed is allowed to participate in any decision regarding any such transaction.
Our Nominating and Governance Committee charter requires the Nominating and Governance Committee to review and approve or disapprove in advance all proposed transactions with executive officers and directors that, if entered into, would be required to be disclosed pursuant to Item 404 of Regulation S-K, the SEC provision which requires disclosure of any related person transaction with our Company that exceeds $120,000 per fiscal year. Our Nominating and Governance Committee must also review reports, which our General Counsel provides periodically, and not less often than annually, regarding transactions with executive officers and directors (other than compensation) that have resulted, or could result, in expenditures even if they are not required to be disclosed pursuant to Item 404 of Regulation S-K.
Our Audit Committee charter requires our Audit Committee to review and approve or disapprove all proposed transactions, prior to such transactions, with any person owning more than 5% of any class of our voting securities that, if entered into, would be required to be disclosed pursuant to Item 404 of Regulation S-K. In addition, our Audit Committee charter requires our Audit Committee to review reports regarding such transactions, which our General Counsel provides to our Audit Committee periodically, and not less often than annually, regarding transactions with any persons owning more than 5% of any class of the voting securities of AGL that have resulted, or could result, in expenditures even if they are not required to be disclosed pursuant to Item 404 of Regulation S-K. Our Audit Committee charter also requires the Audit Committee to review other reports and disclosures of insider and affiliated party transactions which our General Counsel provides periodically, and not less often than annually.

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Our General Counsel identifies related person transactions requiring committee review pursuant to our committee charters from transactions that are:
disclosed in director and officer questionnaires (which must also be completed by nominees for director) or in certifications of Global Code of Ethics compliance
reported directly by the related person or by another employee of our Company
identified by our vendor management procedures and matching gift procedures based on comparison of vendors and matching gift recipients against a list of directors, executive officers and known 5% shareholders and certain of their related persons
WHAT RELATED PERSON TRANSACTIONS DO WE HAVE?
From time to time, institutional investors, such as large investment management firms, mutual fund management organizations and other financial organizations become beneficial owners (through aggregation of holdings of their affiliates) of 5% or more of a class of our voting securities and, as a result, are considered “related persons” under the SEC’s rules. These organizations may provide services to us. In 2021, the following transactions occurred with investors who reported beneficial ownership of 5% or more of our voting securities.
As indicated in “Which Shareholders Own More Than 5% of Our Common Shares,” Wellington Management Group LLP and its affiliates, which we refer to as Wellington Management, and BlackRock, Inc. and its affiliates, which we refer to as BlackRock, own approximately 9.8% and 13.8% of our Common Shares outstanding, respectively, as of March 11, 2022 (the record date for our Annual General Meeting), based on the amount of Common Shares they reported in their Schedule 13G filings as of the date set forth in such filing, and on the amount of our Common Shares outstanding as of the record date. We appointed Wellington Management as an investment manager to manage certain of our investment accounts prior to it reaching such ownership thresholds. As of December 31, 2021, Wellington Management managed approximately $2.7 billion of our investment assets, which is approximately 29% of our total fixed maturity and short-term investment portfolio. In 2021, we incurred expenses of approximately $1.9 million related to our investment management agreement with Wellington Management. BlackRock supplies our investment reporting module, and in 2021 we incurred expenses of approximately $497,000 with respect to that module.
From time to time, certain officers, directors, employees, their family members and related charitable foundations, some of whom may be “related persons” under the SEC’s rules, may make investments in various private funds, vehicles or accounts managed by our Company. These investments are available to those of our Company’s employees whom we have determined to have a status that reasonably permits us to offer them these types of investments in compliance with applicable laws. Generally, these investments are not subject to the management fees and performance allocations or incentive fees charged to other investors.
DELINQUENT SECTION 16(a) REPORTS
Our executive officers and directors are subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. We believe that all of our executive officers and directors complied with all filing requirements imposed by Section 16(a) of the Exchange Act on a timely basis during fiscal year 2021.
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HUMAN CAPITAL MANAGEMENT
We recognize that our workforce, as a key driver of our long-term performance, is among our most valued assets. During this critical period in our history, as we seek to accomplish a multi-year transformation into a diversified financial services company with a dual focus on financial guaranty insurance and asset management, and as the global community continues to battle an ongoing health crisis, the contributions and well-being of our people are essential to our success.
As a result, our key human capital management objectives are to attract and retain a diverse group of the highest quality employees, including talented and experienced business leaders who drive our corporate strategies and build long-term shareholder value. To promote these objectives, our human capital management programs are designed to reward and support employees with competitive compensation and benefit packages in each of our locations around the globe, and with professional development opportunities to cultivate talented employees and prepare them for critical roles and future leadership positions.
COMPENSATION AND BENEFITS
Our compensation program is designed to attract, retain and motivate talented individuals and to recognize and reward outstanding achievement. The components of our program consist of base salary and may include incentive compensation in the form of an annual cash incentive and deferred compensation in the form of cash and/or equity (including, in the case of certain of our asset management professionals, an entitlement to a portion of carried interest allocated to the general partners of certain of the funds we manage). We believe that a compensation program with both short-term and long-term awards provides fair and competitive compensation and aligns the interests of employees and investors. We also offer employees benefits such as life and health (medical, dental and vision) insurance, retirement savings plans, an employee stock purchase plan, paid time off, paid family leave, an employee assistance program, commuter benefits, tuition reimbursement, reimbursement of expenses for infertility treatments and adoption, emergency backup child, elder and pet care, reimbursement of health club fees, online classes for children, and corporate matches of an employee’s charitable contributions.
CULTURE
We seek to foster and maintain strong ethical standards and a reputation as a business that conducts itself professionally and with a high degree of integrity. In addition, we work to provide and support a respectful and inclusive environment that values the abilities of each employee, leading to enhanced engagement and improved retention. Education and awareness are critical components in promoting our cultural values across the organization. Upon onboarding and annually, all employees are required to complete training in our Global Code of Ethics as well as our policies on the prevention of sexual harassment and discrimination. We also provide additional targeted training and guidance to specific personnel regarding anti-fraud and anti-bribery and anti-corruption related matters.
Transparency towards stakeholders, including shareholders, policyholders, investors and employees, is another hallmark of our culture. For example, each quarter after we issue our financial results, in addition to meeting with shareholders and policyholders, our CEO and our Chief Financial Officer hold a town-hall style meeting for all employees where they provide an update on our performance and strategy, acknowledge contributions made by employees to the continued success of our business and answer questions.
EMPLOYEE DEVELOPMENT OPPORTUNITIES
We invest in the professional development of our workforce. To support the advancement of our employees, we endeavor to strengthen their qualifications by providing equitable access to training, including in leadership, management and effective communication skills, and mentoring opportunities, as well as tuition reimbursement assistance. We also provide opportunities for qualified employees to work abroad in another of our offices. As discussed below, in late 2021, we launched a formal one-on-one mentoring program to provide an additional learning resource for our employees.
DIVERSITY AND INCLUSION
Diversity has long been an important consideration for us. We are committed to building and sustaining at all levels of the organization a diverse workforce that is representative of our communities, in a manner consistent with our business needs, scale and resources, and creating an inclusive culture and workplace that embraces the differences within our staff and effectively utilizes the many and varied talents of our employees.
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The composition of our Board reflects our long-standing commitment to diversity. Our Board has been racially and ethnically diverse for well over 15 years. We have had at least one woman serving on our Board for over ten years, and currently have four women serving on our Board.
Our Board recognizes the importance of diversity and inclusion issues to our stakeholders and, in May 2019, established a dedicated Environmental and Social Responsibility Committee to assist the Board in providing oversight of our policies and practices regarding diversity and inclusion issues that affect our business, stakeholders and long-term strategy. The Environmental and Social Responsibility Committee reviews information about our diversity and inclusion initiatives, workforce composition, turnover and other relevant data.
We formed an employee-led Diversity and Inclusion Committee, composed of employees with different backgrounds, points of view, levels of seniority and tenure with us, to provide input into our policies and strategies for achieving a diverse workforce and an inclusive culture. Our employee-led Diversity and Inclusion Committee has played a key role in recommending and working to implement strategies and initiatives, such as the mentoring program and employee resource groups described below.
Our Diversity and Inclusion Policy articulates our commitment to building and sustaining a diverse workforce at all levels of our company and creating an inclusive culture and guides our approaches for achieving these goals. You can find our Diversity and Inclusion Policy on our website at www.assuredguaranty.com/governance.
During 2021, we continued to expand and enhance our existing diversity and inclusion initiatives by adding several new programs:
EMPLOYEE RESOURCE GROUPS. Based on employee feedback, we launched employee resource groups for African Americans, women and working parents to create community, build awareness and encourage employees to engage with and support one another. The employee resource groups began meeting in late 2021.
MENTORING. Our collegial and collaborative culture fosters informal mentoring and learning. In late 2021, we launched a formal one-on-one mentoring program to provide an additional learning resource for our employees, to facilitate the onboarding of new recruits, and to reinforce connectedness – especially during periods of remote work and also as we transition to the hybrid work schedule discussed below. The pilot program was offered to all employees across all of our offices. We engaged an outside consultant to provide workshops for both mentors and mentees.
BIAS AWARENESS TRAINING. As an equal opportunity employer, we have policies that prohibit unlawful discrimination, harassment and other forms of explicit bias. To address implicit bias, we provided bias awareness training for all of our employees in the spring of 2021 on how to identify and interrupt unconscious bias and the role each employee can play to promote diversity, equity and inclusion.
TALENT PIPELINE. We added a number of talent acquisition strategies to our recruiting practices in an effort to deliberately reach and attract a diverse and qualified applicant pool. In addition, through our philanthropy efforts, we invest in organizations that work to create a pipeline of diverse and qualified candidates.
We have taken several other steps to demonstrate our organizational commitment to diversity and inclusion. Recently, our CEO signed the CEO Action for Diversity and Inclusion Pledge, the largest CEO-driven business commitment to advance diversity and inclusion in the workplace. In addition, to incentivize and hold senior management accountable, we include environmental and social responsibility objectives (including with respect to diversity and inclusion) in our executive compensation structure.
COVID-19 RESPONSE AND HYBRID WORK
As the worldwide health crisis enters its third year, we continue to navigate through an unprecedented time. In response to the COVID-19 pandemic, we have prioritized safety and adaptability. At the start of the global pandemic, we initiated our business continuity protocols and instructed our employees to work from home, placing an emphasis on the well-being of our employees and their families. Our investments in technology and the regular testing of our business continuity plan allowed us to quickly shift to remote work. Throughout the pandemic, we have encouraged frequent communications and the use of virtual meeting platforms to keep our teams connected and support our employees as they work from home.
The success of remote work, both at our company and across the broader labor market, sparked a collective re-evaluation of the nature of office work. In 2020, at the start of the COVID-19 remote work experience, and again in late 2021 in preparation for a return to the office, we surveyed our employees to better understand their needs and concerns. We also observed industry trends and peer practices. We used this information to craft a viable and sustainable remote work policy. Currently, we offer employees the option to work remotely for a portion of their time – both as a convenience to employees and to remain competitive as an employer.
In preparation for the return of employees to our office, we took a number of measures to provide for the safety and security of our personnel while at the office and continue to monitor and implement guidance provided by local governments in the jurisdictions where we maintain offices.

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ENVIRONMENTAL AND SOCIAL RESPONSIBILITY
Our commitment to environmental and social responsibility starts at the top of our organization. Our Board of Directors recognizes the importance of environmental and social issues to its stakeholders and, in May 2019, established a dedicated Environmental and Social Responsibility Committee to assist the Board in providing oversight of our company’s policies and practices regarding environmental and social responsibility issues that affect our business, stakeholders and long-term strategy. The Environmental and Social Responsibility Committee focuses on a number of subject areas, including environmental risk, particularly climate change related risks, and aspects of human capital management, such as diversity and inclusion, and training and development. Governance matters remain the responsibility of the Nominating and Governance Committee and Compensation Committee.
FINANCIAL GUARANTY — UNDERWRITING AND INVESTMENT
We consider climate-related risk and material environmental, social and governance factors, which we refer to as ESG factors, in managing both our insured and investment portfolios.
In our insured portfolio, we assess environmental and climate-related risks in our financial guaranty business by requiring that credit underwriting submissions include consideration of environmental and climate-related factors as part of the analysis. Vulnerability to significant or unmitigated exposure to physical risks, such as the increased severity, frequency or duration of weather events or rising sea levels, or the emergence of transition risks, are considered alongside other relevant risk factors to determine if such environmental issues materially impact an obligor’s expected performance. Surveillance review protocol for our insurance portfolio includes a variety of parameters and criteria along with the consideration of environmental risk factors, such as exposure to extreme weather events, geographic locations prone to flooding or wildfires, and compliance with environmental requirements for their potential impact on debt service payments.
In our investment portfolio, we incorporate material ESG information into the investment analysis in order to enhance the investment decisions required to achieve our principal investment objectives. Our portfolio managers rely on their respective ESG corporate philosophy statements and use ESG information, along with a variety of other economic factors, including risk and valuation metrics, when conducting research and due diligence on new investments, and again when monitoring investments for Assured Guaranty’s investment portfolio. On an annual basis, we instruct our two primary external portfolio managers to conduct an ESG analysis of their respective portions of our investment portfolio, to the extent to which ESG data is readily available, for us to analyze if there are any material ESG risks in the portfolio that may adversely impact return expectations.
In addition, we have determined not to make any new investments for our investment portfolio in thermal coal enterprises. As a consequence, we will refrain from making any new investments in (i) thermal coal enterprises that generate 30% or more of their revenue from either the ownership, exploration, mining, or refining of thermal coal, and (ii) corporate and municipally owned utilities that generate 30% or more of their electricity from thermal coal.
ASSET MANAGEMENT
AssuredIM incorporates consideration of ESG issues alongside traditional financial factors such as credit analysis and cash flow in its approach to prudent and responsible investing. AssuredIM views ESG as another factor through which it can examine an investment because it recognizes that ESG risks and opportunities can impact current asset value as well as long term investment performance. The manner and degree in which AssuredIM’s investment professionals integrate ESG issues into the investment decision making process depend upon multiple factors, including investment strategy, portfolio construction, asset class, sector, region, investment time horizon, available data, and investor objectives.
ENVIRONMENTAL AND SOCIAL POLICIES
We have adopted, and periodically review and update, our Environmental Policy, Statement on Climate Change, and Human Rights Statement that evidence our good corporate citizenship and express our commitments to conduct business in a sustainable and responsible manner in respect of people and the planet. These policies may be found on our website at www.assuredguaranty.com/governance.

14 Assured Guaranty 2022 Proxy Statement


GREENHOUSE GAS EMISSIONS
As a financial services firm with approximately 400 employees, the direct impact of our operations on the environment is relatively small. Nevertheless, we contribute to the global effort to combat climate change by monitoring our greenhouse gas emissions, which we refer to as GHG emissions. In 2019, we instituted a program to measure, manage and report our GHG emissions on an enterprise-wide basis and set targets for emissions reductions. Pursuant to the Greenhouse Gas Protocol, we conduct internal data collection and analysis annually for its Scope 1, Scope 2 and certain key Scope 3 GHG emissions. In 2020, our total GHG emissions equaled approximately 2,762.1 total tonnes of CO2e. Our methodology and results are reviewed periodically by an independent third party, which conducts a limited assurance review in accordance with ISO 14064-3 International Standards.
CORPORATE PHILANTHROPY
Giving is an integral part of our corporate culture. We contribute generously to a broad range of causes through direct donations, matching gifts, and corporate sponsorships. Our Corporate Philanthropy Committee, formed in 2020 and composed of volunteer employees, provides our workforce the opportunity to direct philanthropic efforts by selecting charity partners and sourcing employee volunteer activities.
In 2021, we expanded our direct donations program by allocating incremental funds to support the development of targeted strategic partnerships and made $200,000 in contributions to three organizations that work to improve access to education for New York City’s underserved populations. In response to the pattern of threats and violence targeted at Asian American and Pacific Islander communities during 2021, we made an aggregate of $100,000 in contributions to four organizations that work to address this issue across the country. We also expanded the scope of our corporate donations to further align with our vision and values which included a program to support veterans and our first ever contribution to support sustainable and local agriculture. Also, despite the pandemic, we participated in several company sponsored events, including a coat drive and a return to school backpack distribution event, which totaled 240 hours of employee volunteer time. Furthermore, we implemented an employee paid leave program which allows each employee 8 hours per annum to participate in volunteer activities.
We match employee and director gifts to eligible charitable institutions in amounts up to $15,000 each year per individual. In 2021, we provided matching gifts to approximately 250 organizations that are important to our employees and directors.
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 INFORMATION ABOUT OUR COMMON SHARE OWNERSHIP
HOW MUCH STOCK IS OWNED BY DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS?
The following table sets forth information, as of March 11, 2022, the record date for our Annual General Meeting, regarding the beneficial ownership of our Common Shares by our directors, nominees and executive officers whose compensation is reported in the compensation tables that appear later in this proxy statement, which persons we refer to as our named executive officers, and by the group comprising our directors, nominees and those persons who, as of December 31, 2021, constituted our named executive officers and other executive officers. Unless otherwise indicated, the named individual has sole voting and investment power over the Common Shares under the column “Common Shares Beneficially Owned.” The Common Shares listed for each director, nominee and executive officer constitute less than 1% of our outstanding Common Shares, except that Mr. Frederico beneficially owns approximately 2.33% of our Common Shares. The Common Shares beneficially owned by all directors, nominees, named executive officers and other executive officers as a group, including the unvested restricted Common Shares, constitute approximately 4.51% of our outstanding Common Shares.
Name of Beneficial Owner
Common
Shares
Beneficially
Owned
Unvested
Restricted
Common
Shares(1)
Restricted
Share Units(2)
Robert A. Bailenson 211,086  —  152,388 
Francisco L. Borges 268,746  9,544  — 
Russell B. Brewer II(3)
196,632  —  88,355 
G. Lawrence Buhl 45,580  2,824  — 
David A. Buzen 81,023  —  62,661 
Ling Chow 77,396  —  86,304 
Dominic J. Frederico(4)
1,528,494  —  510,171 
Bonnie L. Howard 36,650  2,824  — 
Thomas W. Jones 36,554  2,824  — 
Patrick W. Kenny 72,874  3,409  — 
Alan J. Kreczko 45,868  6,330  — 
Simon W. Leathes 21,167  2,824  — 
Michelle McCloskey —  2,922  — 
Michael T. O’Kane 65,491  2,824  — 
Yukiko Omura 16,667  2,824  — 
Lorin P.T. Radtke —  2,824  — 
Courtney C. Shea —  2,824  — 
 
All directors, nominees and executive officers
as a group (20 individuals)(5)
2,918,766 44,797 1,033,681
(1)    The reporting person has the right to vote (but not dispose of) the Common Shares listed under “Unvested Restricted Common Shares.”
(2)    The Common Shares associated with restricted share units are not deliverable as of March 11, 2022, or within 60 days of March 11, 2022, and therefore cannot be voted or disposed of within such time period. As a result, these shares are not considered beneficially owned under SEC rules. We include them in the table above, however, because we view them as an integral part of share ownership by our executive officers. The restricted share units held by our executive officers vest on specified anniversaries of the date of the award, with Common Shares delivered upon vesting.
        This column includes 37,907 share units allocated to Mr. Bailenson and 28,872 share units allocated to another executive officer, due to their elections to invest a portion of their AG US Group Services Inc. Supplemental Executive Retirement Plan accounts in an employer stock fund.
(3)    Mr. Brewer resigned as an executive officer of AGL, effective December 31, 2021, in accordance with the terms of a separation agreement described under "Compensation Discussion and Analysis--Separation Agreement."
16 Assured Guaranty 2022 Proxy Statement


(4)    Common Shares beneficially owned by Mr. Frederico include shares owned by Mr. Frederico’s spouse and daughter, and shares owned by a family trust, over which Mr. Frederico has the power to direct the voting and disposition. Common Shares beneficially owned by Mr. Frederico also include 300,000 shares he pledged in accordance with our stock trading policy.
(5)    Giving effect to the resignation of Mr. Brewer as an executive officer of AGL as of December 31, 2021, as well as other changes to the executive officers of AGL in early 2022, as of March 11, 2022, for all directors and executive officers as a group (19 individuals), the total Common Shares beneficially owned was 2,722,134, the total unvested restricted Common Shares was 44,797, and the total restricted share units was 945,326.
WHICH SHAREHOLDERS OWN MORE THAN 5% OF OUR COMMON SHARES?
The following table shows all persons we know to be direct or indirect owners of more than 5% of our Common Shares as of the close of business on March 11, 2022, the record date for the Annual General Meeting. On March 11, 2022, 65,691,443 Common Shares were outstanding, including 44,797 unvested restricted Common Shares. Our information is based on reports filed with the SEC by each of the firms listed in the table below. You may obtain these reports from the SEC.
Name and Address of Beneficial Owner
Number of Shares
Beneficially Owned
Percent
of Class
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
9,049,844(1)
13.8%
Putnam Investments, LLC
100 Federal Street
Boston, MA 02110
7,706,196(2)
11.7%
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
7,517,675(3)
11.4%
Wellington Management Group LLP
c/o Wellington Management Company LLP
280 Congress Street
Boston, MA 02210
6,462,794(4)
9.8%
Dimensional Fund Advisors LP
6300 Bee Cave Road, Building One
Austin, TX 78746
3,997,428(1))
6.1%
(1)    Based on a Schedule 13G/A filed by BlackRock, Inc. on January 28, 2022, reporting the amount of securities beneficially owned as of December 31, 2021. BlackRock, Inc. has sole voting power over 8,806,404 shares and sole dispositive power over 9,049,844 shares
(2)    Based on a Schedule 13G/A filed by Putnam Investments, LLC on February 14, 2022, reporting the amount of securities beneficially owned as of December 31, 2021. Putnam Investments, LLC has sole voting power over 1,936,848 shares and sole dispositive power over 7,706,196 shares.
(3)    Based on a Schedule 13G/A filed by The Vanguard Group on February 9, 2022, reporting the amount of securities beneficially owned as of December 31, 2021. The Vanguard Group has shared voting power over 36,958 shares, sole dispositive power over 7,419,772 shares and shared dispositive power 97,903 shares.
(4)    Based on a Schedule 13G/A filed by Wellington Management Group LLP on February 4, 2022, reporting the amount of securities beneficially owned as of December 31, 2021. Wellington Management Group LLP has shared voting power over 5,788,677 shares and shared dispositive power over 6,462,794 shares.
(5)    Based on a Schedule 13G filed by Dimensional Fund Advisors LP on February 8, 2022, reporting the amount of securities beneficially owned as of December 31, 2021. Dimensional Fund Advisors LP has sole voting power over 3,936,353 shares and sole dispositive power over 3,997,428 shares.

17 Assured Guaranty 2022 Proxy Statement


PROPOSAL NO. 1: ELECTION OF DIRECTORS
Our Bye-Laws provide for a maximum of 21 directors and empower our Board of Directors to fix the exact number of directors and appoint persons to fill any vacancies on the Board until the next Annual General Meeting. The Board may appoint any person as a director to fill a vacancy on the Board occurring as the result of any existing director being removed from office pursuant to the Bye-Laws or prohibited from being director by law; being or becoming bankrupt or making any arrangement or composition with their creditors generally; being or becoming disqualified, of unsound mind, or dying; or resigning. The Board may also appoint a person as a director to fill a vacancy resulting from an increase in the size of the Board or a vacancy left unfilled at an Annual General Meeting.
Our Board of Directors has voted to reduce the Board from 13 to 12 members as of the date of our Annual General Meeting this year. Following the recommendation of the Nominating and Governance Committee, our Board of Directors has nominated Francisco L. Borges, G. Lawrence Buhl, Dominic J. Frederico, Bonnie L. Howard, Thomas W. Jones, Patrick W. Kenny, Alan J. Kreczko, Simon W. Leathes, Michelle McCloskey, Yukiko Omura, Lorin P.T. Radtke, and Courtney C. Shea as directors of AGL. Proposal No. 1 is Item 1 on the proxy card.
Our directors are elected annually to serve until their respective successors shall have been elected.
image_47.jpg
   The board of directors recommends that you vote “FOR”
the election of the nominees as directors of AGL.
It is the intention of the persons named as proxies, subject to any direction to the contrary, to vote in favor of the candidates nominated by the Board of Directors. We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board, or the Board may reduce the number of directors to be elected.
There are no arrangements or understandings between any director and any other person pursuant to which any director was or is selected as a director or nominee.
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OUR DIVERSE BOARD
Election of the current nominees will result in our Board of Directors being composed of individuals with diverse backgrounds and experience, and will result in a Board of Directors that is, as a group, diverse by gender, race or ethnicity, age, and tenure.
GENDER DIVERSITY
RACIAL OR ETHNIC DIVERSITY
chart-e36b44c2b66e423ab79.jpgchart-84a36db4ab964356971.jpg
n Women n Asian
n Men n Black or African American
n White
AGE DIVERSITY
DIRECTOR TENURE
9.4 Years
Average Tenure
chart-659a1ae45e464c588b1.jpgchart-47476728983946e5b61.jpg
n <65 n <6
n 65-70 n 6-10
n >70 n 11+
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OUR DIRECTORS’ SKILLS
Summary information about our director nominees and their skills relevant to serving on our Board is provided in the matrix below. Further information about each director nominee may be found on the seven pages following this one.
Borges Buhl Frederico Howard Jones Kenny Kreczko Leathes McCloskey Omura Radtke Shea
Financial Guaranty Industry ü ü ü ü ü ü ü ü ü
U.S. Public Finance ü ü ü ü
Non - U.S. Finance ü ü
Infrastructure Finance ü ü ü ü ü
Audit and Internal Control ü ü ü ü ü ü ü ü ü ü
Government Service ü ü ü ü
Financial Reporting ü ü ü ü ü ü ü ü ü ü
Investment Management ü ü ü ü ü ü ü ü ü ü
Legal and Compliance ü ü ü ü ü ü ü
Insurance Industry ü ü ü ü ü ü ü
Banking ü ü ü ü
Corporate Governance ü ü ü ü ü ü ü ü ü ü ü
Risk Management ü ü ü ü ü ü ü ü ü ü ü
Enterprise Risk Management ü ü ü ü ü ü ü
Cybersecurity and Data Privacy ü ü ü ü ü ü
Human Capital Management ü ü ü ü ü ü
Environmental and
Climate Change
ü ü   ü ü
Audit Com. Financial Expert* ü ü NA ü ü ü ü ü
Independent ü ü ü ü ü ü ü ü ü ü ü
Director Since 2007 2004 2004 2012 2015 2004 2015 2013 2021 2014 2021 2021
Age 70 75 69 68 72 79 70 74 60 66 53 61



*    In the case of persons who are not currently serving on the Audit Committee, the individual is likely to be qualified to be an audit committee financial expert based on their experience, but was not designated as such by the Board of Directors this year.
20 Assured Guaranty 2022 Proxy Statement



 
NOMINEES FOR DIRECTOR

Francisco L. Borges
Chair of the Board
Director Since: 2007
Committee Memberships:
Nominating and Governance  (Chair)
Executive (Chair)
borges.jpg
Qualifications:
Mr. Borges has expertise in finance arising from his experience structuring and marketing financial guaranty insurance, and in investment management. In addition, his public service background has given him insight on public finance. His current position gives Mr. Borges insights into the financial markets in which our Company operates and will be particularly useful as our Company expands its asset management business. Each of these areas is important to our business.
Biography:
Mr. Borges, age 70, became a director of AGL in August 2007, and has been Chair of our Board of Directors since May 2015. He is a partner of Ares Management Corporation (Ares) and Co-Head of Ares Secondary Solutions. Prior to its acquisition by Ares in 2021, Mr. Borges was Chair and Managing Partner of Landmark Partners, LLC, an alternative investment management firm where he has been employed since 1999. Previously, Mr. Borges was managing director of GE Capital’s Financial Guaranty Insurance Company and capital markets subsidiaries. Mr. Borges is a former Treasurer for the State of Connecticut and a former Deputy Mayor of the City of Hartford, Connecticut.
Mr. Borges also chairs the board of trustees of the Knight Foundation and is a member of the board of trustees for the Millbrook School. He is also a member of the board of directors of Davis Selected Funds, where he serves on the Pricing Committee, and of Hartford Healthcare. On March 28, 2022, and after nine years of service, Mr. Borges will be stepping down from the board of directors of Jefferies Financial Group Inc., where he serves on the Audit Committee and the Nominating and Corporate Governance Committee.
G. Lawrence Buhl 
Independent Director
Director Since: 2004
Committee Memberships:
Audit
Compensation
Environmental and Social Responsibility
image_26.jpg
Qualifications:
Mr. Buhl’s insurance and board experience and his knowledge of specific financial reporting requirements applicable to financial guaranty companies and familiarity with compliance, finance, governance, control environment and risk management requirements and processes for public companies and the financial guaranty industry benefit the Board in its deliberations and oversight.
Biography:
Mr. Buhl, age 75, became a director of AGL upon completion of our 2004 initial public offering. Through 2003, Mr. Buhl served as the Regional Director for Insurance Services in Ernst & Young LLP’s Philadelphia, New York and Baltimore offices and as audit engagement partner for insurance companies, including those in the financial guaranty industry.
Mr. Buhl served as a director for Harleysville Group, Inc. and its majority shareholder, Harleysville Mutual Insurance Company, from 2004 through their 2012 merger/combination with Nationwide Mutual Insurance Company and served on an Advisory Board to Nationwide through April 2014. Mr. Buhl is a member of the Board of Directors of Penn National Insurance Group in Harrisburg, PA since April 2015 and is also an emeritus member of the Board of Sponsors of the Sellinger School of Business and Management of Loyola University Maryland.


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Dominic J. Frederico
Chief Executive Officer
Director Since: 2004
Committee Memberships:
Executive
image_27.jpg
Qualifications:
Mr. Frederico has the most comprehensive knowledge of all aspects of our operations as well as executive experience. He also has extensive industry experience, which makes him valuable both as an officer and as a director of AGL.
Biography:
Mr. Frederico, age 69, has been a director of AGL since our 2004 initial public offering, and the President and Chief Executive Officer of AGL since 2003. During his tenure as President and Chief Executive Officer, our Company became the leading provider of municipal bond insurance and financial guaranties. Under his leadership, our Company completed its 2004 initial public offering and, in 2009, acquired the financial guaranty insurance company now named Assured Guaranty Municipal Corp., thereby bringing together the only two monoline bond insurers to continue writing financial guaranty policies before, during and after the 2008 financial crisis. In the following years, he led our acquisition of a number of the remaining legacy financial guaranty insurance companies or their portfolios, expanding our reach, consolidating industry capital and solidifying our position as the leader in the financial guaranty industry. More recently, he is leading our expansion into asset management, which we believe will provide us with a new revenue source, reduce the volatility of our earnings and create another avenue for growth.
Mr. Frederico served as Vice Chair of ACE Limited (now known as Chubb Limited) from 2003 until 2004 and served as President and Chief Operating Officer of ACE Limited and Chair of ACE INA Holdings, Inc. from 1999 to 2003. Mr. Frederico was a director of ACE Limited from 2001 through May 2005. From 1995 to 1999, Mr. Frederico served in a number of executive positions with ACE Limited, during which period he oversaw the successful acquisition and integration of the domestic and international property casualty operations acquired by ACE Limited from CIGNA Corporation in July 1999 and the acquisition of Capital Re Corp., the predecessor company to our Company, in December 1999.
Prior to joining ACE Limited, Mr. Frederico spent 13 years working for various subsidiaries of the American International Group. His last position at the group was Senior Vice President and Chief Financial Officer of AIG Risk Management.
Mr. Frederico is a member of the Amynta Group advisory board.
Bonnie L. Howard
Independent Director
Director Since: 2012
Committee Memberships:
Audit (Chair)
Compensation
Nominating and Governance
image_28.jpg
Qualifications:
Ms. Howard’s background in audit, finance and enterprise risk management is valuable to the Board in its oversight of our financial reporting and credit and risk management policies.
Biography:
Ms. Howard, age 68, became a director of AGL in August 2012. Ms. Howard has more than 30 years of experience in credit, risk management and financial reporting policies. She worked at Citigroup, Inc. from 2003 to 2011, serving as Chief Auditor from 2004 to 2011 and Global Head of Control and Emerging Risk from 2010 to 2011, leading a team of over 1,500 professionals covering $1.9 trillion of assets in over 100 countries, until her retirement in 2011. She was previously Managing Director of Capital Markets Audit at Fleet Boston Financial and a Managing Director at JPMorgan in the roles of Deputy Auditor and head of Global Markets Operational Risk Management. Ms. Howard is a certified public accountant in the United States and has over a decade of experience with KPMG and Ernst & Young.
Ms. Howard serves on the board of directors of Artisan Partners Funds, where she chairs the Audit Committee. Ms. Howard previously served on the board of directors of BMO Financial Corp., where she was a member of the Audit Committee, and the board of directors of BMO Harris Bank N.A., where she chaired the Directors’ Trust Committee and the Audit Committee, until April 2018.
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Thomas W. Jones
Independent Director
Director Since: 2015
Committee Memberships:
    Compensation (Chair)
    Audit
Nominating and Governance
image_29.jpg
Qualifications:
Mr. Jones’ background has given him extensive experience in investment management and in the operations of large financial institutions, which is valuable to the Board as our Company expands its asset management business. His previous service on the boards of other financial services companies and the Federal Reserve Bank of New York adds value to the Board and Board committee deliberations.
Biography:
Mr. Jones, age 72, became a director of AGL in August 2015. Mr. Jones is the founder and senior partner of venture capital firm TWJ Capital LLC. Prior to founding TWJ Capital in 2005, he was the chief executive officer of Global Investment Management at Citigroup, which included Citigroup Asset Management, Citigroup Alternative Investments, Citigroup Private Bank and Travelers Life & Annuity. Earlier, he held a series of positions at TIAA-CREF, including vice chair and director, president and chief operating officer, and executive vice president and chief financial officer, and at John Hancock Mutual Life Insurance Company, where he rose to senior vice president and treasurer. He began his career in public accounting and management consulting, primarily at Arthur Young & Company (predecessor to Ernst & Young).
Mr. Jones was elected to the board of directors of Jefferies Financial Group, Inc. effective March 28, 2022. A trustee emeritus of Cornell University, Mr. Jones has served on numerous boards in the past, including those of the Federal Reserve Bank of New York (where he was vice chair), Altria Group, Freddie Mac, Travelers Group, Fox Entertainment Group, Pepsi Bottling Group and TIAA-CREF. Mr. Jones has been designated a Board Leadership Fellow by the National Association of Corporate Directors, and is a licensed Certified Public Accountant.


Patrick W. Kenny
Independent Director
Director Since: 2004
Committee Memberships:
    Compensation
    Nominating and Governance
    Executive
image_30.jpg
Qualifications:
Mr. Kenny has extensive insurance industry experience, including executive experience within the industry. In addition, the Board benefits from Mr. Kenny’s experience serving as a Board member of several Voya funds as our Company expands its asset management business, as well his experience as an accountant.
Biography:
Mr. Kenny, age 79, became a director of AGL upon completion of our 2004 initial public offering. He served as the President and Chief Executive Officer of the International Insurance Society in New York, an organization dedicated to fostering the exchange of ideas through a program of international seminars and sponsored research, from 2001 to 2009. From 1998 to 2001, Mr. Kenny served as executive vice president of Frontier Insurance Group, Inc. From 1995 to 1998, Mr. Kenny served as senior vice president of SS&C Technologies. From 1988 to 1994, Mr. Kenny served as Group Executive, Finance & Administration and Chief Financial Officer of Aetna Life & Casualty.
Until 2018, Mr. Kenny served on the board of directors of several Voya funds, where he was a member of the Audit Committee and the Chairperson of the Nominating and Governance Committee. Until December 2009, Mr. Kenny was a director and member of the Audit and the Compensation committees of Odyssey Re Holdings Corp. Mr. Kenny was also a director of the Independent Order of Foresters from 1997 to 2009.
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Alan J. Kreczko
Independent Director
Director Since: 2015
Committee Memberships:
Environmental and Social Responsibility (Chair)
Finance
Risk Oversight
 
image_31.jpg
Qualifications:
Mr. Kreczko’s lengthy service in senior legal and policy positions both in the federal government and in the insurance industry, as well as the global and governmental perspective he has gained, are valuable to the Board. Mr. Kreczko’s experience chairing The Hartford’s Environment Committee makes him particularly valuable as the chair of our Environmental and Social Responsibility Committee.
Biography:
Mr. Kreczko, age 70, became a director of AGL in August 2015. Mr. Kreczko retired from The Hartford Financial Services Group, Inc., which we refer to as The Hartford, on December 31, 2015, where he served as executive vice president and general counsel from June 2007 until June 2015. In that capacity, Mr. Kreczko oversaw the law department, government affairs, compliance and communications. Additionally, he chaired The Hartford’s Environment Committee. From June 2015 until December 2015, he served as Special Advisor to the Chief Executive Officer.
Mr. Kreczko joined The Hartford in 2003 after 27 years in public service at the United States Department of State, where he held various senior positions. As the Acting Assistant Secretary of State for Population, Refugees and Migration, he led the department’s response to humanitarian crises in conflict situations, including Afghanistan, Timor, and West Africa. Before that, Mr. Kreczko served as special assistant to President Clinton and legal advisor to the National Security Council. Earlier, he participated in sensitive bilateral and multilateral negotiations as deputy general counsel to the Department of State and as legal advisor to the personal representatives for Middle East negotiations of Presidents Carter and Reagan. Mr. Kreczko is on the board of the Boys and Girls Clubs of Hartford.


Simon W. Leathes
Independent Director
Director Since: 2013
Committee Memberships:
    Risk Oversight (Chair)
    Finance
    Executive
 
image_32.jpg
Qualifications:
Mr. Leathes’ considerable experience in investment and risk management, as well the institutional knowledge gained through his directorship of our Company’s U.K. affiliate, is valuable to the Board and its committees.
Biography:
Mr. Leathes, age 74, joined the Board of AGL in May 2013. From 2012 to 2017, Mr. Leathes was a non-executive director of HSBC Bank plc and was a member of its Risk Committee and its Audit Committee; he was also a non-executive director and member of the Audit and Risk Committees of HSBC Trinkaus & Burkhardt AG. In December 2011, he became an independent, non-executive director of our Company’s U.K. insurance subsidiary, Assured Guaranty UK Limited. Mr. Leathes also served as an independent, non-executive director of our Company’s two other U.K. insurance subsidiaries: Assured Guaranty (UK) plc and Assured Guaranty (London) plc, until November 7, 2018 when they were consolidated into Assured Guaranty UK Limited. After nine years of service, in December 2020 Mr. Leathes retired from the Assured Guaranty UK Limited board in accordance with Prudential Regulatory Authority Guidelines. From 1996 to 2018, Mr. Leathes served as a non-executive director of HSB-Engineering Insurance Ltd., a U.K. subsidiary of Munich Re, where he was the chair of the Audit and Finance Committee.
Mr. Leathes served as Vice Chair and Managing Director of Barclays Capital, the investment banking subsidiary of Barclays plc, from January 2001 until his retirement in December 2006. In addition, he served from 2001 to 2010 as a non-executive director of Kier Group plc, a company listed on the London Stock Exchange, where he also served as chair of the Audit Committee and a member of the Remuneration and Nominations committees. Until June 2014, Mr. Leathes served as the chair of the trustees of the Kier Group Pension Scheme.

24 Assured Guaranty 2022 Proxy Statement


Michelle McCloskey
Independent Director
Director Since: 2021
Committee Memberships:
Audit
Environmental and Social Responsibility
image_33.jpg
Qualifications:
Ms. McCloskey’s extensive experience in investment and risk management adds considerable value to the Board and its committees.
Biography:
Ms. McCloskey, age 60, has more than 35 years of experience in executive roles in the energy, financial trading and asset management sectors. She worked at Man Group, an investment management firm with assets in excess of $113 billion, from 2006 to 2019, serving as a member of the Man Group Executive Committee since 2012, President of Man FRM since 2015 and President of the Americas since 2017. In this capacity, Ms. McCloskey was responsible for selection and oversight of all investment strategies, managing client relationships and overseeing key strategic relationships across the business. Ms. McCloskey also led Man Group’s diversity and inclusion network in the U.S. Prior to her tenure at the Man Group, Ms. McCloskey was a portfolio manager in the commodities sector for a variety of institutions, including energy companies, investment banks, and private asset managers.
Ms. McCloskey is an independent director for the Sanford Bernstein family of funds at Alliance Bernstein.
Ms. McCloskey served as a member of the Investment Advisory Committee for the Texas Tech University System Endowments. She also served on numerous governance committees, including investment and board positions for both publicly and privately offered investment vehicles and as a trustee for the US Charitable Trust.
Yukiko Omura
Independent Director
Director Since: 2014
Committee Memberships:
Environmental and Social Responsibility
    Finance
    Risk Oversight
image_35.jpg
Qualifications:
Ms. Omura brings more than 40 years of international professional experience in the financial sector working in major financial centers of the world. Her global experience adds considerable value to the Board.
Biography:
Ms. Omura, age 66, joined the Board of AGL in May 2014. She is a non-executive director of Nishimoto HD Co. Ltd. and a non-executive member of the Board of Directors of HSBC Bank plc. She also serves as Senior Independent Director of the Private Infrastructure Development Group and has served as chair of its subsidiary, GuarantCo. Ms. Omura was a Supervisory Board Member of Amatheon Agri Holding N.V. until March 2018. She served as Undersecretary General and Vice President of the International Fund for Agricultural Development until February 2012 and, prior to that, as Executive Vice President and CEO of the Multilateral Investment Guarantee Agency of the World Bank Group.
Ms. Omura began her career as a project economist with the Inter-American Development Bank, working in the infrastructure sector. She then worked in senior positions at several major investment banks in Tokyo, New York and London. At JPMorgan she worked in mergers and acquisitions and derivatives, launched the emerging markets operations in Tokyo and led EMSTAR (Emerging Markets Sales,Trade and Research) Marketing for Northern Europe out of London. Subsequently, Ms. Omura served as Senior Vice President and Head of Emerging Markets Asia, and then as Head of Credit Business, Asia at Lehman Brothers. She then became Managing Director and Head of the Global Fixed Income and Derivatives Department for Union Bank of Switzerland, Japan. Following a merger with Swiss Bank Corp., Ms. Omura became the new head of the merged bank’s Global Fixed Income and Derivatives Department, after which she joined Dresdner Bank as Managing Director and Head of Global Markets and Debt Office, Japan.
In 2002, Ms. Omura created the HIV/AIDS Prevention Fund, a charitable company based in London.
25 Assured Guaranty 2022 Proxy Statement


Lorin P.T. Radtke
Independent Director
Director Since: 2021
Committee Memberships:
   Finance
   Risk Oversight
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Qualifications:
Mr. Radtke’s background has given him considerable experience in investment, client franchise development, structured product marketing and risk management, all of which are valuable to the Board and its committees.
Biography:
Mr. Radtke, age 53, is the co-founder and partner of venture capital firm M Seven 8. Prior to founding M Seven 8 in 2017, he spent 24 years in various positions with Goldman Sachs, eight years of which was as a Partner. His career at Goldman Sachs included time in the Chicago, London and New York offices. Mr. Radtke was the Head of Mortgage and Structured Product Sales through the financial crisis of 2008-09 and its emergence from that crisis (2009-14). Mr. Radtke had additional leadership roles within the credit, mortgage and structured product disciplines within the Fixed Income Currencies and Commodities (FICC) Division. He was also responsible for additional sales/marketing groups, portfolio solution groups, and public advisory groups within FICC. These positions included Head of Credit Products Group—Hard Asset and Portfolio Solutions, Head of Structured Products—Distribution and Sourcing, Head of Structured Portfolio Solutions Group and Head of CLO Origination.
Mr. Radtke played an integral role in the development of diverse professionals within Goldman Sachs by leading summer intern, vice president and managing director diversity development programs. He has served as a director on various non-profit boards, including Children of Fallen Patriots Foundation, University of Wisconsin—Milwaukee School of Business and Mariposa Family Learning Center.
Mr. Radtke is a member of the board of directors of the Lord Abbett Family of Funds.
Courtney C. Shea
Independent Director
Director Since: 2021
Committee Memberships:
Audit
Environmental and Social Responsibility
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Qualifications:
Ms. Shea’s expertise in audit, risk and investment management is valuable to the Board and its committees. In addition, her experience with state and local governments has given her valuable insight into the U.S. public finance market.
Biography:
Ms. Shea, age 61, has had a 35 year career in U.S. public finance in which she has served as both a municipal advisor and investment banker working with state and local governments, not for profits and universities, in their issuance of municipal bonds. Ms. Shea has served as the Managing Member of Columbia Capital Management, a national municipal advisory firm, since September 2013 and retired in April 2021. Prior to her tenure at Columbia Capital Management, Ms. Shea was an investment banker with several Wall Street firms, including serving as National Head of Public Finance at a division of ABN AMRO for five years.
Ms. Shea is an independent director and Audit Committee chair of the Professional Diversity Network. Additionally she serves on several not–for–profit boards, including the Joffrey Ballet of Chicago and the Milken Institute Center for Financial Markets Public Finance Advisory Council. Ms. Shea was a founding member of Women in Public Finance, a women’s professional organization founded in 1996, and has been designated a Board Leadership Fellow by the National Association of Corporate Directors.
26 Assured Guaranty 2022 Proxy Statement



AUDIT COMMITTEE REPORT
The Audit Committee consists of six members of the Board of Directors. After reviewing the qualifications of the current members of the Audit Committee and any relationships they may have with our Company that might affect their independence from our Company, the Board of Directors has determined that:
each Audit Committee member is independent, as that concept is defined in Section 10A of the Exchange Act, the SEC rules promulgated thereunder, and the NYSE listing standards, of our Company and our management;
each Audit Committee member is financially literate, as contemplated by the NYSE listing standards; and
five Audit Committee members, Mss. Howard and Shea and Messrs. Buhl, Jones and O'Kane, are audit committee financial experts, as that term is defined under Item 407(d) of Regulation S-K.
The Audit Committee operates under a written charter approved by the Board of Directors, a copy of which is available on our website at www.assuredguaranty.com/governance. Each year, the Audit Committee reviews the charter and reports to the Board of Directors on its adequacy. As more fully described in the charter, the primary purpose of the Audit Committee is to assist the Board of Directors in its oversight of the integrity of our financial statements and financial reporting process; our compliance with legal and regulatory requirements and ethics programs as established by management; the system of internal accounting and financial controls; the audit process; the role and performance of our internal audit process; and the performance, qualification and independence of our independent auditor.
The Audit Committee annually evaluates the performance of our Company’s independent auditor and provides assistance to the members of the Board of Directors in fulfilling their oversight of the financial reporting practices, including satisfying obligations imposed by Section 404 of the Sarbanes Oxley Act of 2002, and the financial statements of our Company. The Audit Committee selects the independent auditor for the Board of Directors to recommend to the shareholders to appoint. Our Company’s current independent auditor is PricewaterhouseCoopers LLP, which we refer to as PwC.
PwC has served as our independent auditor since 2003. The Audit Committee believes there are significant benefits to having an independent auditor with an extensive history with the Company, including higher quality audit work and accounting advice, due to PwC’s institutional knowledge of our business and operations, accounting policies and financial systems, and internal control framework and operational efficiencies.
Subject to our Company’s shareholders’ statutory right to set the terms of engagement for our independent auditor, including setting the remuneration of the independent auditor and authorizing the Board of Directors, through the Audit Committee, annually to set such terms of engagement, the Audit Committee contracts with and sets the fees paid to our independent auditor. The fees for services for PwC’s audit services the past two fiscal years are set forth under Proposal No. 3: Appointment of Independent Auditor. Audit fees relate to professional services rendered for the audit of our consolidated financial statements, audits of the U.S. GAAP and statutory financial statements of certain subsidiaries, review of quarterly consolidated financial statements and U.S. GAAP and statutory financial statements of certain subsidiaries and audit of internal control over financial reporting as required under Sarbanes Oxley Section 404.
The Audit Committee also determines that the non-audit services provided to our Company by the independent auditor are compatible with maintaining the independence of the independent auditor. The Audit Committee’s pre-approval policies and procedures are discussed under Proposal No. 3: Appointment of Independent Auditor.
The Audit Committee annually conducts an evaluation of the independent auditor to determine if it will recommend the retention of the independent auditor. The Audit Committee is also involved in evaluating the qualifications and performance of the engagement team and lead partner. As part of the evaluation of the independent auditor, the engagement team and lead partner, the Audit Committee surveys select Company management and all members of the Audit Committee to evaluate the historical and recent performance of the independent auditor and to determine if the independent auditor is meeting our Company’s expectations. Among other things, the Audit Committee considers PwC’s independence, professional skepticism and objectivity, the quality and candor of PwC’s communications with the Audit Committee and management, the quality and efficiency of the services provided by PwC, and the depth of PwC’s understanding of the Company’s business, operations and systems, including the potential effect on the financial statements of major risk and exposures facing the Company. In addition, the Audit Committee obtains and reviews, at least annually, a report by the independent auditor describing:
the firm’s internal quality-control procedures;
any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation of the firm by governmental or professional authorities, within the preceding five years, and any steps taken to deal with any such issues; and
an assessment of the independent auditors’ independence and relationships between the independent auditor and the Company.
27 Assured Guaranty 2022 Proxy Statement


The Audit Committee is also involved in evaluating the qualifications and performance of the engagement team and the lead partner. The Audit Committee considers the experience of the independent auditor in auditing companies in the financial guaranty insurance industry and considers the effect of changing independent auditors when assessing whether to retain the current independent auditor. Based upon the foregoing, and in light of the quality of audit services and sufficiency of resources provided, the Audit Committee believes choosing PwC as our Company’s independent auditor would be in the best interest of the Company and its shareholders and recommends the retention of PwC as our Company’s independent auditor for 2022.
Our Company’s management prepares our consolidated financial statements in accordance with U.S. GAAP and is responsible for the financial reporting process that generates these statements. Management is also responsible for establishing and maintaining adequate internal controls over financial reporting and for performing an assessment of the effectiveness of these controls. PwC audits our year-end financial statements and reviews interim financial statements. PwC also audits the effectiveness of our internal controls over financial reporting. The Audit Committee, on behalf of the Board of Directors, monitors and reviews these processes, acting in an oversight capacity relying on the information provided to it and on the representations made to it by our management, PwC and other advisors. We have also retained Ernst & Young LLP, which we refer to as EY, to provide services to support our Company’s internal audit program and compliance with Section 404 of the Sarbanes Oxley Act of 2002.
During the last year, and earlier this year in preparation for the filing with the SEC of the Company’s Form 10-K, the Audit Committee:
reviewed and discussed the audited financial statements contained in the Form 10-K with management and PwC;
reviewed and discussed our quarterly earnings press releases and related materials;
reviewed the overall scope and plans for the internal and independent audits and the results of such audits;
reviewed critical accounting estimates and policies and the status of our loss reserves;
reviewed and discussed our compliance with our conflict of interest, regulatory compliance and global code of ethics policies with the General Counsel, Chief Compliance Officer and/or Deputy Compliance Officer;
reviewed and discussed our enterprise risk management and insurance underwriting with the Chief Risk Officer, the Chief Surveillance Officer and the Chief Credit Officer, coordinating the oversight of enterprise risk management and insurance underwriting with the Risk Oversight Committee;
reviewed and discussed cybersecurity and privacy matters with our Chief Information Security Officer;
reviewed and discussed the impact of the continuing COVID-19 pandemic on our insurance segment and our asset management segment;
reviewed and discussed the impact on IT resources, cybersecurity, audit procedures and our internal controls of the remote work environment resulting from the continuing COVID-19 pandemic as well as the hybrid office / work-from-home environment adopted by the Company upon the return of its employees to the office;
reviewed our compliance with the requirements of Sarbanes Oxley Section 404 and our internal controls over financial reporting, including controls to prevent and detect fraud;
reviewed our whistleblower policy and its application;
discussed with PwC all the matters required to be discussed by U.S. GAAP, including the matters required to be discussed by the applicable requirements of the Public Accounting Oversight Board and the SEC, such as:
PwC’s judgments about the quality, not just the acceptability, of our Company’s accounting principles as applied in our financial reporting;
methods used to account for significant unusual transactions;
the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus;
the process used by management in formulating particularly sensitive accounting estimates and the basis for PwC’s conclusions regarding the reasonableness of those estimates;
disagreements with management (of which there were none) over the application of accounting principles, the basis for management’s accounting estimates, and disclosures in the financial statements; and
any significant audit adjustments and any significant deficiencies in internal control;
reviewed and discussed with PwC the critical audit matter (CAM) as disclosed in their audit report on our consolidated financial statements;
reviewed all other material written communications between PwC and management; and
28 Assured Guaranty 2022 Proxy Statement


discussed with PwC their independence from our Company and management, including a review of audit and non-audit fees, and reviewed in that context the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence.
At each quarterly meeting, EY has the opportunity to address pending issues with the Audit Committee and semi-annually specifically reviews the results of internal audits and the overall internal audit program.
At each meeting, the Audit Committee meets in executive session (i.e., without management present) with representatives of PwC to discuss the results of their examinations and their evaluations of our internal controls and overall financial reporting. Similar executive sessions are held at least semi-annually with representatives of EY. In addition, the Audit Committee meets regularly with certain members of senior management in separate sessions.
Based on the review and discussions referred to above, and in reliance on the information, opinions, reports or statements presented to the Audit Committee by our Company’s management and PwC, the Audit Committee recommended to the Board of Directors that the December 31, 2021 audited consolidated financial statements be included in our Company’s Annual Report on Form 10-K.
The foregoing report has been approved by the Audit Committee.
Bonnie L. Howard, Chair
G. Lawrence Buhl
Thomas W. Jones
Michelle McCloskey
Michael T. O'Kane
Courtney C. Shea
29 Assured Guaranty 2022 Proxy Statement



 
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
CD&A ROADMAP

Summary _______________________________
31
2021 Achievements Highlights _____________
31
Our Total Shareholder Return _____________
33
2021 Results Against Financial Performance Targets _____________________________
35
Snapshot of Our CEO’s 2021 Compensation _
35
Executive Compensation Program Structure and Process __________________________
36
Overview of Philosophy and Design ________
36
Shareholder Outreach on Our Executive Compensation Program ________________
38
The Decision-Making Process _____________
39
Components of Our Executive Compensation Program ____________________________
40
CEO Performance Review _________________
48
Overview ______________________________
48
Base Salary ___________________________
49
Cash Incentive _________________________
49
Equity Compensation ____________________
55
Perquisites ____________________________ 56
 
Other Named Executive Officer Compensation Decisions ____________________________
56
Non-Financial Objectives and Achievements of the Other Named Executive Officers ____
56






Compensation Decisions for the Other Named Executive Officers _______________________ 58
Separation Agreement ______________________
59
2021 Executive Compensation Conclusion______
60
Compensation Governance __________________
60
The Role of the Board’s Compensation Committee _____________________________
60
The Role of the Independent Consultants ______
60
Executive Compensation Comparison Group ___
61
Executive Officer Recoupment Policy and Related Forfeiture and Termination for Cause Provisions _____________________________
61
Share Ownership Guidelines ________________
62
Anti-Hedging Policy _______________________
63
Anti-Pledging Policy _______________________
63
Award Timing ____________________________
63
Post-Employment Compensation _____________
64
Retirement Benefits _______________________
64
Severance ______________________________
64
Change in Control Benefits _________________
64
Tax Treatment _____________________________
64
Non-GAAP Financial Measures _______________
65

30 Assured Guaranty 2022 Proxy Statement



SUMMARY
Our executive compensation program is designed to attract and retain talented and experienced business leaders who drive our corporate strategies and build long-term shareholder value.
The Compensation Committee assesses performance using pre-established measures of success that are tied to our key business strategies. This approach encourages balanced performance, measured relative to financial and non-financial goals as well as measures of shareholder value, and discourages excessive risk taking or undue leverage by avoiding too much emphasis on any one metric, or on short-term results.
In 2021 we exceeded all but one of the six financial performance targets set by our Compensation Committee at the beginning of the year, in each case also exceeding prior year performance. We also enjoyed substantial success in achieving the non-financial goals set by our Compensation Committee at the beginning of the year.
2021 Achievement Highlights
More than five years of difficult and complex negotiation and litigation over defaulted insured Puerto Rico exposures finally bore fruit in 2021. We completed two plan support agreements with the Federal Oversight Management Board for Puerto Rico and other important stakeholders in 2021, covering 74% of the Puerto Rico debt outstanding on December 31, 2021. This led directly to to the resolution just last week of a significant portion of our insurance exposure to Puerto Rico -- approximately $1.3 billion of net par outstanding at December 31, 2021. With the resolution of our Puerto Rico exposures so much more likely when we closed our books for the year, we were able to take a benefit against our expected losses related to Puerto Rico that was the primary driver of the $204 million economic benefit against our expected losses in the public finance sector.
Similarly, more than a decade of hard work with servicers in our legacy residential mortgage backed securities (which we refer to as RMBS) portfolio to encourage the servicers to keep borrowers in their homes through modifications and forbearances and to maintain liens on the homes continued to pay off in 2021 as ongoing home price appreciation improved expected recoveries and performance of our insured RMBS portfolio, which, over the year, resulted in an economic benefit against our expected losses of $100 million.
Together, the many-years-long loss mitigation efforts for our Puerto Rico and legacy RMBS exposures contributed substantially to our 2021 net income of $389 million and our 2021 adjusted operating income* of $470 million, or $5.23 and $6.32 per share, respectively. Our 2021 net income per share increased by nearly 25% from 2020, and our 2021 adjusted operating income per share more than doubled from 2020. By year-end 2021, our shareholders’ equity attributable to Assured Guaranty Ltd. per share, adjusted operating shareholder’s equity* per share and adjusted book value* per share all reached record levels, at $93.19, $88.73 and $130.67, respectively. Our share price rose 59.4% from $31.49 at year-end 2020 to $50.20 at year-end 2021.
These results were driven in part by our successful pursuit of all of our primary business strategies:
We achieved robust new business production in our insurance segment despite historically low interest rates, with contributions from our U.S. public finance, non-U.S. public finance (including infrastructure) and global structured finance business.
Gross written premiums were $377 million, while our new business production in the insurance segment, a non-GAAP financial measure we refer to as PVP,* was $366 million.
In U.S. public finance, our primary insurance market, we insured 5.0% of par issued out of the entire U.S. new issue municipal market, up substantially from 4.4% in 2020, and the most since 2011. With a more than 60% share of new-issue insured par, we led the municipal bond insurance industry to its highest market penetration in a dozen years.
Also in the U.S. public finance market, we insured 48 transactions with over $100 million of par, more than in any full year over the past decade and a nearly 25% increase from the 39 such transactions we insured in 2020. (We focus on such transactions as a good barometer of institutional demand for our product.)
In the non-U.S. public finance market, we generated $79 million of PVP.
In the structured finance market, we produced nearly $47 million of PVP, the second-highest PVP in over a decade (excluding a portfolio reinsurance transaction).
*    Adjusted operating shareholder’s equity, adjusted book value, adjusted operating income and PVP are non-GAAP financial measures. An explanation of these measures, which are considered when setting compensation for our senior leadership team, and a reconciliation to the most comparable GAAP measures, may be found on pages 102 to 106 of our Annual Report on Form 10-K for the year ended December 31, 2021.
31 Assured Guaranty 2022 Proxy Statement


We continued to develop our Assured Investment Management (AssuredIM) brand.
Despite the COVID-19 pandemic, we raised $3.0 billion of inflows of third-party AUM.
We issued $2.6 billion in new collateralized loan obligations, which we refer to as CLOs.
As a result of both inflows of third-party AUM and ending certain rebates, we increased our fee-earning assets under management by 28%.
In addition, we are using the knowledge base and experience of AssuredIM to expand the categories and types of investments included in our investment portfolio. Capital invested in AssuredIM funds generated $80 million in pretax equity in earnings, nearly double the $42 million generated in 2020, and representing a blended return of 20.8% in 2021.
We further managed our capital, by returning excess capital to our shareholders and by reducing the average coupon on $600 million of long-dated debt by issuing new debt.
We returned approximately $562 million during 2021 through repurchasing Common Shares ($496 million) and distributing dividends ($66 million).
Over the last nine years, we have distributed approximately $4.8 billion to our shareholders through Common Share repurchases and dividends; and we have repurchased approximately 68% of our Common Shares outstanding at December 31, 2012, which was just before we began our Common Share repurchase program. In 2021 alone, we repurchased approximately 14% of the Common Shares we had outstanding at the beginning of 2021.
We issued $500 million of 10-year Senior Notes at a rate of 3.15% in May and issued $400 million of 30-year Senior Notes at a rate of 3.6% in August. Most of the proceeds of these debt offerings were used to redeem $600 million of long-dated debt obligations, and the remaining proceeds were used primarily for share repurchases. We reduced the average coupon on $600 million of our debt from 5.89% to 3.35%.
We achieved these results despite a persistently challenging business environment.
The uncertainty and travel and face-to-face meeting restrictions caused by the continuing COVID-19 pandemic made it more difficult to conduct business in some of our markets.
Over the last several years, municipal bond yields have been at historically low levels, making our insurance product less attractive to issuers. The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance. The 30-year AAA MMD rate started 2021 at 1.39% and remained mostly steady ending the year at 1.49%. The average rate for the year was 1.54%, below the 1.71% average for the prior year and a new historical low. The level of interest rates influences how high a premium our Company can charge for our financial guaranty insurance product, with lower interest rates generally lowering the premium rates we may charge.
The difference, or credit spread, between the 30-year A-rated General Obligation (GO) relative to the 30-year AAA MMD averaged 33 basis points, which we refer to as bps, in 2021--down from 42 bps in 2020. BBB credit spreads measured on the same basis averaged 70 bps in 2021, significantly tighter than the 121 bps average in 2020. Both the A and BBB credit spreads are at their narrowest levels in over a decade. A narrower credit spread is one factor that may restrict the level of premiums our Company can charge for our financial guaranty insurance product.
We also continued to face pricing competition in certain segments of the financial guaranty market from another financial guaranty insurer that serves a smaller portion of the market than we serve.
The achievements described in this section even in the face of this environment were important considerations for the Compensation Committee in determining the compensation of our named executive officers for the 2021 performance year.
32 Assured Guaranty 2022 Proxy Statement


Our Total Shareholder Return
The table and chart below depict the cumulative TSR in dollars on our Common Shares from December 31, 2016 through February 28, 2022, relative to the cumulative TSR of the Russell Midcap Financial Services Index, S&P 500 Stock Index, S&P 500 Financials Index and our current executive compensation comparison group over the same period. (Our current executive compensation comparison group is described below under “Compensation Governance—Executive Compensation Comparison Group.”) The table and chart depict the value on December 31 of each year from 2016 through 2021, and on February 28, 2022, of a $100 investment made on December 31, 2016, with all dividends reinvested.
 
Our Compensation Committee has long recognized that, as the only public company still writing financial guaranty business, it is difficult for us to identify companies or indices with companies that experience business environments similar to ours, and to which we can compare our performance, including our TSR. For example, developments related to Puerto Rico appear to have had a much larger influence on our TSR than on that of any of the indices or groups to which we compare ourselves. We have substantial insured exposure to general obligation bonds of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations. Many of these entities have defaulted on their payment obligations, and we are paying claims related to such payment defaults. We believe that developments relating to our Puerto Rico exposure have had a strong influence on the price of our shares. This appears to have contributed to volatility of our share price. On January 18, 2022, the plan of adjustment covering $1.2 billion, or 34% of our insured net par outstanding of Puerto Rico exposures as of December 31, 2021, was approved. Then, on January 20, 2022, orders were entered finalizing the consensual modification for another $168 million of our insured Puerto Rico exposure outstanding as of December 31, 2021. On February 24, 2022, we announced in our earnings release the impact of these developments on our 2021 consolidated financial statements. We believe it is instructive to look at the TSR measurements not only at December 31 of each year, but also at February 28, 2022 (the last trading day in February), when the price of our shares reflected the impact of 2021 developments related to Puerto Rico announced on February 25, 2022. As can be seen, when measured through February 28, 2022, our TSR essentially kept pace with most of the financial indices to which we compare ourselves, and exceeded our current executive compensation comparison group by nearly 50%.

  chart-bf69ed066bd04acf991.jpg
Calculated from total returns published by Bloomberg.

33 Assured Guaranty 2022 Proxy Statement


 
Cumulative TSR 
from 12/31/16
Assured 
Guaranty
Executive Compensation Comparison Group S&P 500 
Index
S&P 500 
Financials Index
 Russell MidCap 
Financial
Services Index
12/31/2016
100.00
100.00
100.00
100.00
100.00
12/31/2017
90.96
114.10
121.82
122.14
116.62
12/31/2018
104.56
97.49
116.47
106.21
104.91
12/31/2019
136.07
130.66
153.13
140.30
140.11
12/31/2020
89.89
129.22
181.29
137.83
147.03
12/31/2021
145.94
160.02
233.28
185.90
199.75
02/28/2022
180.15
153.76
214.58
183.48
194.82
 Calculated from total returns published by Bloomberg.

The chart and table above compare our TSR based on a start date of December 31, 2016. Another way to compare our TSR to our current executive compensation comparison group is to examine how our TSR compares over various periods ending on February 28, 2022, after the price of our shares reflected the impact on our financial statements of our 2021 accomplishments. (Our current executive compensation comparison group is described below under “Compensation Governance—Executive Compensation Comparison Group.”) The chart and table below show our cumulative TSR over the previous 14 months, 38 months and 62 months, with an end date of February 28, 2022, compared to that of our current executive compensation comparison group. On this basis, our TSR is more than five times that of our current executive compensation comparison group over the previous 14 months, and materially exceeds that of our current executive compensation comparison group over 38 months and 62 months.
chart-5640f975504b4bdcb4f.jpg

Total Shareholder Return Comparison
  Period Ending 02/28/2022
Executive Compensation Comparison Group
Average TSR
  Assured Guaranty TSR  
14 months 18.99% 100.42%
38 months 57.72% 72.29%
62 months 53.76% 80.15%
Calculated from total returns published by Bloomberg.
34 Assured Guaranty 2022 Proxy Statement



2021 Results Against Financial Performance Targets
We exceeded all but one of the six 2021 financial performance targets set by the Compensation Committee at the beginning of the year, and in each of those instances exceeded the 2020 actual results. The table below summarizes our 2021 results against the 2021 targets for the financial performance measures. The financial performance measurements are explained in more detail below under “Executive Compensation Program Structure and Process—Components of Our Executive Compensation Program—Cash Incentive Compensation”.
 
FINANCIAL PERFORMANCE MEASURES 2021 TARGETS  2021 RESULTS BELOW  TARGET ABOVE TARGET
Core Operating Income per Diluted Share* $3.62 $5.91
Core Operating Return on Equity* 4.6% 7.3%
Core Operating Shareholders’ Equity per Share* $82.90 $88.26
Core Adjusted Book Value per Share* $122.60 $130.33
PVP $475 million $361 million
Gross Third-Party Assets Raised $2.7 billion $3.0 billion

*    Five of the six financial targets are based on non-GAAP financial measures and four of the six are labeled “core” to distinguish them from similar non-GAAP financial measures. The four “core” measures have been adjusted to exclude the impact of consolidating certain variable interest entities and similar entities, which we refer to as VIEs, while the similar non-core measures have not been so adjusted. We include below under “Non-GAAP Financial Measures” a description of the adjustments we make to the most comparable GAAP financial measures to arrive at these measures.
Snapshot of Our CEO’s 2021 Compensation
For 2021, 89.5% of Mr. Frederico’s compensation constituted incentive compensation: 28.9% of his compensation was in the form of a performance-based cash incentive that was awarded based on measuring his performance against financial performance targets and non-financial objectives set at the beginning of the year, and 60.6% was in the form of a long-term equity-based incentive, with 60% of that equity award dependent on performance relative to our pre-established objectives for 2022 to 2024. The allocation between his fixed and incentive compensation for the 2021 performance year increased to 89.5% incentive compensation from 88.9% for the 2020 performance year.
Mr. Frederico received a compensation package for the 2021 performance year that was 6.5% higher than the one he received for the 2020 performance year, reflecting our strong financial and share price performance and the achievement of non-financial strategic objectives that position us for future growth and our successful transformation into a financial services company with a dual focus on financial guaranty and asset management. The increase should also be viewed in the context of Mr. Frederico's compensation package for the 2020 performance year being 4.2% lower than the one he received for the 2019 performance year, and his 2021 compensation package being only 1.9% higher than his 2019 compensation package.
Mr. Frederico’s cash incentive compensation increased by 16.0% from the prior year, largely as a function of the financial performance goal scores awarded by the Compensation Committee. As a result of meeting all but one of the six financial performance targets set by the Compensation Committee, the Compensation Committee awarded Mr. Frederico a weighted score on his financial performance targets of 82.1%, considerably above his score of 61.4% for 2020, when only three of the six financial performance targets were met. The Compensation Committee awarded him a similar weighted score on his non-financial objectives for 2021, 56.1% for 2021 compared to 57.8% for 2020. Mr. Frederico’s total achievement score for 2021 was 138.2%, substantially above his score of 119.2% for 2020, but still below his total achievement score of 149.1% for 2019.
The Compensation Committee considered the appropriate amount of long-term incentive equity compensation to award Mr. Frederico in recognition of our significant achievements despite the continued disruption of COVID-19 and the extraordinarily low interest rates of 2021. In recognition of these accomplishments and the Compensation Committee’s strong desire that Mr. Frederico continue his leadership as we transform our Company into a more diversified financial services company with a dual focus on financial guaranty insurance and asset management, the Compensation Committee granted Mr. Frederico long-term equity compensation with a target nominal value of $7,250,000, an increase of $250,000 from his grant for the 2020 performance year.
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Mr. Frederico’s compensation package for 2021, 2020 and 2019 were composed of the following:
chart-934808386f38454aac0.jpg
chart-44b35837f11044fe9d1.jpg
chart-9f0cdabf3d4b4d11baa.jpg

n
Performance-Based Equity1
n
Time-Based Equity1
n Performance-Based Cash Incentive
n Fixed Compensation-Base Salary

 
 
2021 Performance Year
Compensation
2020 Performance Year
Compensation
Change from
2020 to 2021
Perf. Year
Fixed Compensation—Base Salary (1)
$ 1,250,000 $ 1,250,000   %
Incentive Compensation    
Cash Incentive Compensation $ 3,454,988 $ 2,979,625   16.0 %
Long-Term Performance-Based Equity $ 4,350,000
(2)
$ 4,200,000
(2)
3.6 %
Long-Term Time-Based Equity $ 2,900,000
(2)
$ 2,800,000
(2)
3.6 %
Total Direct Compensation $11,954,988 $11,229,625   6.5 %
(1)    Mr. Frederico’s base salary for each of the 2021 and 2020 performance years was established at the beginning of such performance year, in February. Accordingly, Mr. Frederico’s 2021 base salary was established in February 2021.
(2)    Represents the Compensation Committee’s target nominal value for the relevant performance year. The number of units granted is calculated by dividing such value by the average closing price on the NYSE of a Common Share over the 40 consecutive trading days ending on the date of grant.
The compensation package presented in the table above is different from the SEC-required disclosure in the Summary Compensation Table below and is not a substitute for the information in that table. Rather, it is intended to show how the Compensation Committee linked Mr. Frederico’s compensation and its components to our performance results and his achievements for the prior year.
EXECUTIVE COMPENSATION PROGRAM STRUCTURE AND PROCESS
Overview of Philosophy and Design
Our executive compensation program applies to our CEO, each of our other executive officers, and our other senior managers reporting directly to our CEO, all of whom together we refer to as our senior leadership team. Our executive compensation program is designed to recognize and reward outstanding achievement and to attract, retain and motivate the talented individuals needed to lead and grow our Company’s business. We maintain an ongoing dialog with our shareholders and incorporate their feedback into our program so that the program is aligned with their interests.
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The guiding principles of our program are:
Pay for Performance
Accountability
Alignment
Retention
by providing an incentive for exceptional
performance and the possibility of reduced
compensation if executives are unable to
successfully execute our strategies
for short-
 and long-
term performance
with
shareholder
interests
of highly
qualified executives
with financial guaranty
and asset management
experience
We Align Pay With Performance
Our program rewards the performance of our senior leadership team, who are directly responsible for our operational results, with a higher proportion of variable and performance-based compensation than it rewards lower level executives. We use a mix of variable at-risk compensation with different time horizons and payout forms to provide an incentive for both annual and long-term sustained performance, in order to maximize shareholder value in a manner consistent with our Company’s risk parameters. The Compensation Committee assesses the performance of our senior leadership team from both a financial and a non-financial perspective, using pre-established goals.
Members of our senior leadership team are eligible to receive an annual cash incentive, which is based on their performance against pre-established goals over the previous year. They may also receive a long-term equity incentive, the majority of which is performance-based and cliff vests at the end of a three-year performance period, and the remainder of which is time-based and cliff vests at the end of a three-year period. The long-term equity incentive is structured to encourage retention and a long-range mindset.
Executive Compensation Is Closely Tied To Long-Term Performance
The compensation program is structured with upside potential for superior executive achievements, but also the possibility of reduced compensation if members of our senior leadership team do not successfully execute our Company’s strategies. By increasing our senior leadership team’s motivation to enhance shareholder value over the long term, our compensation program aligns their incentives and shareholder interests.
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For the 2021 performance year, we maintained the same structure for the compensation package for our senior leadership team as we did for the 2020 performance year:
Principal Elements of Executive Compensation Package Purpose
Base Salary
Based on responsibilities, skill set and experience, and market measures
Cash Incentive Compensation
Cash reward for performance against annual financial performance targets and progress against strategic non-financial objectives that we expect to drive our growth over the medium to long term
Equity Incentives
60% in performance restricted share units, which we refer to as PSUs, that may be earned over a 3-year performance period based on performance targets, and are paid at the end of the 3-year performance period if particular performance targets are achieved, with half of the PSUs (or 30% of the long-term equity incentive) being based on growth in our Core Adjusted Book Value per share, and half of the PSUs (or 30% of the long-term equity incentive) being based on
our TSR, relative to the 55th percentile of the Russell
Midcap Financial Services Index
 
40% in restricted share units, which we refer to as RSUs,
that cliff vest at the end of a 3-year period
 
Shareholder Outreach on Our Executive Compensation Program
For the past several years, we have actively engaged with our shareholders in order to obtain their feedback on our executive compensation program. In May 2018, after negative recommendations from the two leading proxy advisory firms, only 60% of the Common Shares voting approved our say-on-pay proposal. Following that 2018 say-on-pay vote, we sought to engage with our shareholders with respect to the changes we proposed to make to the executive compensation program in response to the recommendations from the two leading proxy advisory firms and the say-on-pay result, and based on advice from FW Cook. As part of that process and our continued dialogue with shareholders, we contacted holders of an aggregate of over 77% of our Common Shares (which comprised every shareholder holding more than 0.16% of our outstanding shares). Based on the feedback from our shareholders and advice from FW Cook, we made a number of structural changes to our executive compensation program in 2019:
With respect to the short-term cash incentive compensation, we reduced the CEO’s target individual cash multiple to 2.0x from 2.5x and introduced negative discretion for scoring the achievement of financial performance targets that were set below prior year actual results.
With respect to the long-term equity compensation, we increased the amount dependent on performance measures from 50% to 60% and introduced the two new types of PSUs described above.
We also ended our reimbursement of executives for the cost of financial planning.
In May 2019, after we made these structural changes to our executive compensation program based on discussions with our shareholders and advice from FW Cook, investors holding over 93% of the Common Shares voting approved our say-on-pay proposal at our Annual General Meeting. Then, in May 2020, and with respect to an unchanged executive compensation program, investors holding over 93% of the Common Shares voting once again approved our say-on-pay proposal at our Annual General Meeting. In light of this positive feedback, we made only one change to our compensation program for the 2020 performance year, adding a new financial performance measure related to our asset management business.
In late 2021 and into early 2022, we again sought to engage with our shareholders with respect to compensation matters. We contacted holders of an aggregate of nearly 85% of our outstanding Common Shares (which comprised every shareholder holding more than 0.1% of our outstanding Common Shares) and offered to discuss our executive compensation program. The holders of approximately 24% of our outstanding Common Shares specifically responded that they did not need to speak with us because they had no concerns about our executive compensation program, which we have not changed from last year except to expand our recoupment policy.


38 Assured Guaranty 2022 Proxy Statement


The Decision-Making Process
Our Compensation Committee, composed solely of independent directors, is responsible for all decisions regarding the compensation of our senior leadership team, including our CEO. Our Compensation Committee works closely with FW Cook, the Chair of our Board and management to examine pay and performance matters throughout the year, and consults with our Board prior to making final compensation decisions.
Our Compensation Committee conducts in-depth reviews of performance and then applies judgment to make compensation decisions. Our Compensation Committee believes its process, described below, is an effective way to assess the performance, risk management and leadership demonstrated by Mr. Frederico and other members of our senior leadership team.
In August and November, our Compensation Committee reviews our year-to-date performance against our business plan, our financial performance, and the progress of each member of our senior leadership team against individual performance goals.
In November, our Compensation Committee reviews and approves the metrics and goals in our performance framework and reviews certain performance goals of each member of our senior leadership team for the upcoming year, and begins to formulate its compensation decisions with respect to current year performance. The metrics and goals our Compensation Committee sets in November for the upcoming year are based in part on estimates of the full year performance.
In February, our Compensation Committee meets twice. It first meets in early February to receive and review our final results and to evaluate the performance of members of our senior leadership team for the previous calendar year, which we refer to as the performance year, against that performance year’s goals. Our Compensation Committee formulates its preliminary compensation decisions for members of the senior leadership team with respect to that year’s performance, along with the performance goals for each member of our senior leadership team for the coming year. Later in February, our Compensation Committee discusses with other Board members its preliminary compensation decisions for the previous year and the performance goals for each member of our senior leadership team for the coming year, and then makes its final decisions with respect to those matters. Our CEO is not present when our Compensation Committee goes into executive session to evaluate his performance and determine his compensation.
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In making its compensation decisions, our Compensation Committee follows a five-step approach:
               
Step 5:
Seek input from the independent consultant
concerning CEO pay.
 
Our Compensation Committee considers FW Cook’s analysis of the compensation paid to executive officers in our executive compensation comparison group when evaluating the compensation of our senior leadership team. The role of FW Cook is described in more detail below under “Compensation Governance—the Role of the Independent Consultants.”
           
Step 4:
Analyze trends
among comparison companies.
 
Our Compensation Committee considers market pay levels and trends based on information FW Cook provides about comparison companies.
 
       
Step 3:
Review the individual performance and contributions of each member of our senior leadership team.
 
Our Compensation Committee reviews the individual performance objectives for our CEO and each other member of our senior leadership team, and assesses each person’s performance and contributions. For the members of our senior leadership team other than our CEO, our Compensation Committee considers individual performance assessments and compensation recommendations from our CEO, as well as succession planning and retention issues in this unique segment of the financial services industry.
 
 
Step 2:
Assess Company Performance.
 
Our Compensation Committee reviews our corporate financial performance targets for the performance year and discusses our full-year financial and strategic performance at length, seeking to understand what was accomplished relative to established objectives, how it was accomplished, and the quality of the financial results.
 
Step 1:
Establishment of financial performance goals and
non-financial objectives.
 
At or prior to the beginning of each performance year, our Compensation Committee discusses our Company’s business plan at length and establishes corporate financial goals for the upcoming performance year. Our Compensation Committee also discusses the strategic direction of our Company and establishes non-financial objectives it expects to drive our growth over the medium to long term.
 
Components of Our Executive Compensation Program
For the 2021 performance year, the compensation package for our senior leadership team again consists of three principal elements: base salary, cash incentive compensation and long-term equity incentives. Our practice is to review the components of our executive compensation package separately and monitor the total of the various components. We consider each component and the total against our compensation objectives described in “Overview of Philosophy and Design.” Decisions related to one compensation component (e.g., cash incentive compensation) generally do not materially affect decisions regarding any other component (e.g., long-term equity incentives) because the objectives of each element differ. Due to the seniority of the members of our senior leadership team, variable pay elements are emphasized, but no specific formula, schedule or structure is currently applied in establishing the percentage of total compensation delivered to the members of our senior leadership team through any particular compensation element.
Base Salary
Our Compensation Committee establishes the base salary of each member of our senior leadership team in consultation with FW Cook. We believe base salary is necessary to attract and retain key executives by providing appropriate compensation that is based on position, experience, scope of responsibility and performance. Base salary provides liquidity to our each member of our senior leadership team and balances the levels of guaranteed pay with at-risk pay to properly manage our compensation-related risk. The amount is based on the responsibilities, skills and experience of each member of our senior leadership team, as well as market measures. The level of the base salary of each member of our senior leadership team reflects our Compensation Committee’s view of the contribution that executive has consistently made to our Company’s success over several years, the continuing importance of that executive to our Company’s future, and the difficulty and expense of replacing that executive with one of a similar caliber. Our Compensation Committee does not guarantee salary adjustments on an annual basis; in fact, our CEO’s base salary was last adjusted in February 2017. Base salary is set toward the beginning of the year and is paid to each member of our senior leadership team for ongoing performance throughout the year. For the 2021 performance year, our Compensation Committee established the base salaries of our senior leadership team in February 2021.
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Cash Incentive Compensation
Unlike base salary, which is set at the beginning of the year in which it is paid, cash incentive compensation is determined after the end of the performance year to which such compensation relates. For the 2021 performance year, our Compensation Committee determined the amount of the cash incentive compensation in February 2022.
Our Compensation Committee uses a formula to award cash incentive compensation in order to enhance the transparency of our process. The amount of cash incentive compensation is determined based on the extent to which the members of the senior leadership team achieve certain pre-established performance targets; 67% is tied to the achievement of six financial performance targets and 33% is tied to the achievement of non-financial objectives.
Our Compensation Committee considers the six financial performance targets to be important in assessing our Company and the performance of our senior leadership team; for all but one of our named executive officers, each target has a weighting of 11.17% (for a total of 67%). Five of the financial performance targets are based on non-GAAP financial measures that are described below under “Non-GAAP Financial Measures.”
Similar to the financial performance goals, the non-financial objectives also relate to matters that are important to our business. Our Compensation Committee believes the qualitative objectives are necessary to fully evaluate the annual achievements that benefit our shareholders, and it does not individually weight the non-financial objectives because it believes it is more appropriate to evaluate the level of achievement of all of the non-financial objectives in their totality.
We provide a diagram of our formula for awarding our annual cash incentive compensation below:
charts3-01.jpg

The financial performance targets for 2021 for all the members of our senior leadership team, including Mr. Frederico, our CEO, are set out below. The non-financial objectives for Mr. Frederico are set out below under “CEO Performance Review—Cash Incentive—Mr. Frederico’s Non-Financial Objectives”, while certain of the non-financial objectives for the named executive officers other than Mr. Frederico are discussed below under “Compensation Decisions of Other Named Executive Officers.” For the 2021 performance year, the financial performance targets and the non-financial objectives for the named executive officers were established in February 2021, and the Compensation Committee determined the extent to which they had been satisfied in February 2022.
Five of the six financial goals are based on non-GAAP financial measures and four of those five are labeled “core” to distinguish them from similar non-GAAP financial measures. The four “core” measures have been adjusted to exclude the impact of consolidating certain variable interest entities and similar entities, which we refer to as VIEs, while the similar non-core measures have not been so adjusted. We include below under “Non-GAAP Financial Measures” a description of the adjustments we make to the most comparable GAAP financial measures to arrive at these measures.
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2021 Financial Performance Measures  
Core operating
income per
diluted share
 
enables us to evaluate the amount of income we are generating in our business without certain items, primarily non-economic fluctuations and movements in fair value, foreign exchange movements related to long dated receivables and payables, and other adjustments, as well as removing the impact of consolidating VIEs.
     
Core operating
ROE
 
represents core operating income for a specified period divided by the average of core operating shareholders’ equity at the beginning and the end of that period. This measure enables us to evaluate our return on equity.
Core operating
shareholders’
equity per
share
 
 
presents our equity excluding non-economic fair value adjustments as well as the impact of consolidating VIEs. Core operating shareholders’ equity per share is the basis of the calculation of core adjusted book value, which we refer to as Core ABV, per share, as described below.
     
Core ABV
per share
 
 
reflects our core operating shareholders’ equity, plus unearned premiums in excess of expected losses, plus future estimated revenues from contracts other than financial guaranty insurance contracts (such as specialty insurance contracts and credit derivatives), less deferred acquisition costs. This measure enables us to measure our intrinsic value, excluding our franchise value.
     
PVP represents the estimated value of new business production in our insurance segment. PVP takes into account upfront premiums and the present value of estimated future installment premiums using a consistent discount rate on all new contracts written in a reporting period.
Gross third-party
assets raised
 
represents the gross increase in AUM, from sources other than our subsidiaries (but includes assets from employees and former employees). It represents sales of CLOs, as well as gross increases in funded and unfunded commitments in funds managed by AssuredIM, which we refer to as AssuredIM Funds, during the year. Gross third-party assets raised would also include gross third-party assets obtained in strategic transactions. Gross third-party assets raised increases the total AUM on which we earn recurring asset management fees. We also sometimes refer to this measure as inflows of third-party AUM.

At the beginning of a performance year, our Compensation Committee assigns each member of our senior leadership team an Individual Target Cash Incentive Amount, which is calculated as a multiple of that executive’s base salary, and which we refer to as the Individual Target Cash Incentive Multiple. The amounts of the base salary and Individual Target Cash Incentive Multiples are set based on the executive’s position and level of responsibility, historic pay level, importance to the future strategic direction of our Company and FW Cook’s advice about the compensation practices of companies in our comparison group.
For the 2021 performance year, our Compensation Committee assigned each of the named executive officers an Individual Target Cash Incentive Multiple of 2.0x, the same as last year.
Then, at the end of a performance year, for each member of our senior leadership team, our Compensation Committee calculates and aggregates the weighted achievement scores for the financial performance measures and the individual non-financial objectives. When assessing the level of achievement and assigning scores for the year, our Compensation Committee takes into account the difficulty of achieving particular targets or objectives. Our Compensation Committee has discretion to assign achievement scores of up to 200% for outstanding performance and achievement scores of down to 0% for performance below target, based on its view of the level of achievement attained for each financial performance target, and for the non-financial objectives taken as a whole. With the weightings the Compensation Committee has established for each component of the calculation aggregating 100% overall, the maximum total overall weighted score achievable is 200%, and since the Individual Target Cash Incentive Multiple for each of our named executive officers is 2.0x, the maximum short-term incentive opportunity for each of our named executive officers is 4x their base salary. For the 2018 performance year, in response to the previous year's say-on-pay vote result, shareholder feedback and the advice of FW Cook, the Compensation Committee reduced Mr. Frederico's Individual Target Cash Incentive Multiple to 2.0x from 2.5x, thereby reducing his maximum short-term incentive opportunity to 4x his base salary from 5x his base salary. The Compensation Committee has maintained Mr. Frederico's Individual Target Cash Multiple at 2.0x since then, and Mr. Frederico has not received an increase in his base salary since 2017.
Our Compensation Committee may exercise negative discretion where the financial performance measure result, while above the target established by our Compensation Committee, is less than the prior year result. The Compensation Committee has exercised its negative discretion in this area most recently for the 2019 performance year. For the 2021 performance year, there was no instance
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where the 2021 performance measure result was above the target established by our Compensation Committee but below the prior year result, so the Compensation Committee had no occasion to consider exercising its negative discretion.
Setting Financial Performance Targets
The Compensation Committee selected five of the financial performance measures in 2015 based on the unique earnings model of the financial guaranty industry. The Compensation Committee reconsiders each year whether these measures are the appropriate ones to use in light of our Company’s business. For the 2020 performance year, the Compensation Committee added a sixth financial performance measure, based on gross third-party assets, to appropriately incentivize our executives to develop and grow our asset management business. All six financial performance measures receive an equal weighting of 11.17% (so adding to 67% in total) for most of our senior leadership team. For those members of our senior leadership team with responsibility for particular aspects of our business, financial performance measures related to their areas of responsibility are weighted more heavily than the other measures. Among our named executive officers, only one has financial performance measures with unequal weighting: for Mr. Buzen, gross third party assets raised are weighted 33.5% while the other measures are weighted 6.7% (so again adding to 67% in total). The Compensation Committee believes our progress measured against the financial performance measures it established will, over the long term, result in optimal total shareholder return.
Each year the Compensation Committee sets our financial performance targets at levels it views as challenging based on the projected operating results in our annual business plan. The goals and our business plan acknowledge the unique long-term nature of our financial guaranty insurance business and that the required accounting treatment and operations of a financial guaranty insurer are distinct from other insurance product lines.

Core Operating Income per Diluted Share and Core Operating Return on Equity. Our Compensation Committee set the financial performance targets for core operating income per diluted share and core operating return on equity for the 2021 performance year materially higher than the 2020 actual results. These targets were particularly challenging when considering the unique earnings model of the financial guaranty insurance industry.
When a financial guarantor writes a new financial guaranty policy, it does not earn the full amount of the premium immediately; rather, when a policy is written, the upfront premium it receives (plus the present value of future premiums) is recorded on its balance sheet as the unearned premium reserve, which we refer to as the UPR. This UPR is earned over the term of the insured obligation, often as long as 20, 30 or even 40 years. For example, only approximately 3% of the premiums we earned in 2021 related to new financial guaranty policies we wrote in 2021, and the rest was earned from our previously established UPR. Because the volume and pricing of new financial guaranty business written in a particular year has only a small impact on premium earnings for that year, most of our operating income from our core financial guaranty business may be forecast based on projections with respect to the very significant UPR that we earn as our insured portfolio amortizes.
Despite the relative predictability of the contribution of our primary financial guaranty business to our core operating income per diluted share and core operating return on equity, we consider the financial performance goals we set for these measures to be challenging due to potential uncertainties in the broader market and environment. Those uncertainties include unexpected loss development, level of refunding activity, unexpected mark-to-market movements of investments in alternative investments, and unexpected changes to investment rates. In addition, variability of our share price and availability of funds for share repurchases may add to the challenges of reaching these goals.
Our core operating ROE is also negatively impacted by the amount of excess capital we continue to have. Despite the strides we have made in managing our capital (see “Summary – 2021 Achievement Highlights” above), we believe we still have excess capital that we need regulatory approval to deploy, and therefore are constrained in our ability to improve our capital efficiency and our core operating ROE.

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Core Operating Shareholders’ Equity Per Share and Core Adjusted Book Value Per Share. Our Compensation Committee also wants to encourage our senior leadership team to build intrinsic value in our Company over time for our shareholders, so our Compensation Committee sets targets for core operating shareholders’ equity per share and core adjusted book value per share. Our Compensation Committee believes these measures best capture the long-term value we are building for our shareholders and that growth in these measures will eventually result in growth in the price of our Common Shares. Our Compensation Committee believes that core adjusted book value per share, in particular, is such an important measure of the intrinsic value we are building for our shareholders that our Compensation Committee has made this measure a component of both our short-term and long-term incentive programs. Our Compensation Committee believes that this will motivate our senior leadership team to focus on growth in this measure in both the short and long term, and that eventually growth in the price of our Common Shares will follow.

PVP. Our annual business plan for 2021 challenged our senior leadership team to originate more financial guaranty business in 2021 than the financial guaranty business we originated in 2020. Our most direct measurement of new insurance business origination is PVP. We set our 2021 PVP target nearly 22% higher than our our 2020 actual results.

Gross Third-Party Assets Raised. Our Compensation Committee set this target nearly 69% higher than 2020 actual results. Our Compensation Committee believes that gross third-party assets raised eliminates the “noise” of the reduction of AUM attributable to the wind-down business and is an appropriate metric against which to weigh the success of management’s efforts to grow our asset management business.
Calculating Cash Incentive Compensation
Based on weighted achievement scores for the financial performance targets and the individual non-financial objectives for each member of the senior leadership team, the individual payouts of the cash incentive for 2021 were calculated as follows:
Annual Individual Target Cash
Incentive Amount
X
Annual Achievement Score
(a percentage from 0% to 200%)
 
 
=
Annual Cash  
Incentive
Payout
(
 
2021
Base
Salary
 
X
 
2021
Individual Target
Cash Incentive
Multiple
)
 
X
(
 
2021
Financial Target
Achievement
Score
(weighted 67%)
 
+
 
2021
Non-Financial
Objective
Achievement Score
(weighted 33%)
) =
 
2021 Cash
Incentive
Payout
The basic formula for determining cash incentive compensation has remained the same since our Compensation Committee developed the methodology, together with FW Cook, at the beginning of 2015, and our Company’s performance on key financial measures has improved greatly since that time. Four out of five of the financial performance measurements applicable in both periods have improved, as reflected in the table below.
  FINANCIAL PERFORMANCE GOALS
 
2014
Results
2021
Results
Core Operating Income per Diluted Share $2.83 $5.91
Core Operating Return on Equity 8.1 % 7.3 %
  Core Operating Shareholders’ Equity per Share $37.48   $88.26  
Core Adjusted Book Value per Share $53.78 $130.33
PVP $172 million $361 million
  Gross Third-Party Assets Raised NA   $3.0 billion  
The progress we have made on these fronts is the result of the leadership of Mr. Frederico and the efforts of our senior leadership team. As a result, our Compensation Committee retained the same general methodology and formulas for cash incentive compensation implemented in 2015 for Mr. Frederico and other members of our senior leadership team, although it has fine-tuned its methodology since then, with the addition of a new financial performance measure beginning in the 2020 performance year being the most recent change.
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Long-Term Equity Incentives
In addition to the cash incentive compensation, our Compensation Committee awards long-term incentive compensation in the form of our Common Shares.
Like cash incentive compensation, equity incentive compensation is awarded after the end of the performance year to which such compensation relates. For the 2021 performance year, our Compensation Committee determined the amount of equity incentive compensation in February 2022.
Sixty percent of the nominal value of the award is in the form of PSUs that may be earned over a 3-year performance period based on pre-established performance targets, and are paid at the end of the 3-year performance period if particular performance targets are achieved, and the remaining forty percent is in the form of restricted share units (which we refer to as RSUs) that cliff vest at the end of a 3-year period. Details about the individual awards are set out in “CEO Performance Review” and “Other Named Executive Officer Compensation Decisions.”
For the 2022 grant with respect to the 2021 performance year, the proportion of the long-term equity incentive comprising performance-based PSUs was again 60%, with the remainder in time-based RSUs.

charts3-02.jpg

Performance Share Units. Each performance restricted share unit, or PSU, represents a contingent right to receive up to a certain number of our Common Shares as described below under “Incentive Plans—Assured Guaranty Ltd. 2004 Long-Term Incentive Plan”. The Compensation Committee awards PSUs with the intent of aligning executive pay with our Company’s performance.
PSUs tied to growth in our core adjusted book value per share over a three-year period, which we refer to as ABV PSUs; and
PSUs tied to our TSR over a three-year period relative to the TSR of the 55th percentile of the Russell Midcap Financial Services Index, which we refer to as Relative TSR PSUs.
This structure has been in place since 2019 and the Compensation Committee maintained the same structure for the February 2022 grants.
ABV PSUs
Our Compensation Committee believes that Core ABV per share is the best measure of the intrinsic value of our Common Shares, and that growth in Core ABV per share will eventually result in growth in the price of our Common Shares. Our Compensation Committee believes that this measure is so important that it has incorporated the measure into both its short-term cash incentive program and its long-term equity compensation program, so that the senior leadership team is motivated to grow Core ABV per share on both a short-term and long-term basis.
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Each ABV PSU represents the right to receive up to two of our Common Shares at the end of a three-year performance period, which runs from January 1 of the year of the grant to December 31 three years later, depending on the growth in Core ABV per share over the three-year performance period.
The target growth rate is an aggregate of 15% over that three-year period, for which the recipient earns one Common Share for each ABV PSU.
At 80% of the target growth (or 12%), which we refer to as the threshold, the recipient earns one-half share for each ABV PSU; for growth rates below that amount, the recipient earns no Common Shares.
At 120% of the target growth (or 18%) or above, which we refer to as the maximum, the recipient earns two of our Common Shares for each ABV PSU.
For Core ABV per share growth rates between the threshold and the target and between the target and the maximum, the amount of our Common Shares earned for each ABV PSU is based on straight-line interpolation.
Our Compensation Committee set the ABV PSU target growth rate based on the projected operating results in our annual business plan and after consulting with FW Cook. In setting the ABV PSU target, our Compensation Committee did not consider significant potential or theoretical strategic activities that had not been finalized or share repurchases the funding of which require regulatory approvals that have not yet been obtained, because the conditions for success are highly contingent and outside of the control of our senior leadership team. Given the outsize positive impact on our Company of the successful achievement of at least some such endeavors, our Compensation Committee believes it is appropriate for its senior leadership team to be encouraged to pursue success in these areas through the ABV PSUs. The ABV PSU performance targets remain aligned with our long range plan and are unchanged from last year.
Relative TSR PSUs
Since our ultimate goal is to provide growing shareholder value, our Compensation Committee believes that our long-term equity incentive compensation should also be based on our TSR. However, recognizing that share prices may be influenced by a number of factors, the Compensation Committee decided that a relative measure of TSR was most appropriate.
Each Relative TSR PSU represents the right to receive up to 2.5 (for extraordinary performance at the 95th percentile) of our Common Shares at the end of a three-year performance period, which runs from January 1 of the grant year to December 31 three years later, depending on the performance of our TSR over that three-year period relative to the TSR of the Russell Midcap Financial Services Index, which we refer to as the Index.
The target Company TSR for that period is the 55th percentile of the Index, for which the recipient earns one Common Share for each Relative TSR PSU.
At the 25th percentile of the Index, which we refer to as the threshold, the recipient earns one-half share for each Relative TSR PSU; for Company TSRs below that level, the recipient earns no Common Shares.
A Company TSR at the 95th percentile of the Index, which we refer to as the maximum, or above earns the recipient 2.5 of our Common Shares for each Relative TSR PSU.
For Company TSRs between the threshold and the target and between the target and the maximum, the amount of our Common Shares earned for each Relative TSR PSU is based on straight-line interpolation.
The Compensation Committee adopted the following additional restrictions on the Relative TSR PSUs:
The number of Common Shares that can be earned is capped at one share per Relative TSR PSU if the Company TSR is negative, even if above the 55th percentile.
Common Shares earned pursuant to the Relative TSR PSUs remain restricted until one year after they vest.
Our Compensation Committee selected the Russell Midcap Financial Services Index as the best available measure when it established the TSR PSUs in February 2019. Our Compensation Committee believed that aspects of our business are comparable to aspects of various financial services companies, and so determined that the best benchmark for our TSR was a broad index of somewhat similarly-sized financial services companies. The Compensation Committee made this determination after considering and rejecting a number of other options:
Only one other financial guarantor continues to write new business, and that company is not publicly traded, so a peer group of financial guarantors is not available.
While analysts sometimes categorize us with property and casualty insurance companies, the Compensation Committee believes that factors impacting the performance of property and casualty insurance companies are unlikely to impact our business in the same way, particularly given the unique long-term nature of our financial guaranty insurance business and the fact that the required
46 Assured Guaranty 2022 Proxy Statement


accounting treatment and operations of a financial guaranty insurer are distinct from property and casualty and other insurance product lines.
While the current executive compensation comparison group comprises similarly-sized companies in businesses somewhat similar to our business, many of the companies in that group are mortgage finance and property and casualty insurance and reinsurance companies and our Compensation Committee does not believe that group is an appropriate benchmark for our TSR.
In late 2021, the Compensation Committee considered whether, given changes in the Russell Midcap Financial Services Index since 2019, it should change the reference index used for the TSR PSUs. It chose not to make any changes.
Restricted Share Units
Each restricted share unit represents a right to receive one of our Common Shares at the end of a three-year vesting period as described below under “Incentive Plans—Assured Guaranty Ltd. 2004 Long-Term Incentive Plan”.
Our Compensation Committee awards RSUs with the intent of providing members of the senior leadership team with long-term incentive compensation that increases in value as our Company achieves its strategies. Our Compensation Committee believes this incentivizes members of the senior leadership team to remain with the Company and help build shareholder value over the long term.
47 Assured Guaranty 2022 Proxy Statement



CEO PERFORMANCE REVIEW
Overview
In light of Mr. Frederico’s significant accomplishments in the 2021 performance year and the importance of his continued leadership as we work to transform ourselves into a diversified financial services company, the price performance of our shares over the last year and that we achieved five of our six financial performance targets, the Compensation Committee awarded Mr. Frederico total compensation of $11,954,988, a 6.5% increase from his total compensation for the 2020 performance year. That increase reflects our strong financial and share price performance and the achievement of non-financial strategic objectives that position us for future growth and our successful transformation into a financial services company with a dual focus on financial guaranty and asset management. The increase should also be viewed in the context of Mr. Frederico's compensation package for the 2020 performance year being 4.2% lower than the one he received for the 2019 performance year, and his 2021 compensation package being only 1.9% higher than his 2019 compensation package.
Mr. Frederico’s short-term cash incentive compensation increased by 16.0% from the prior year, largely as a function of the financial performance target scores awarded by the Compensation Committee. Our performance exceeded all but one of the six of the financial performance targets set by the Compensation Committee at the beginning of the year. As a result, the Compensation Committee awarded Mr. Frederico a weighted score on his financial performance targets of 82.1%, considerably above his score of 61.4% for 2020, when only three of the six financial performance targets were met. The Compensation Committee also awarded him a similar weighted score on his non-financial objectives for 2021, 56.1% for 2021 compared to 57.8% for 2020. Mr. Frederico’s total achievement score for 2021 was 138.2%, substantially above his score of 119.2% for 2020, but still below his total achievement score of 149.1% for 2019.
The Compensation Committee also considered the appropriate amount of long-term incentive equity compensation to award Mr. Frederico in recognition of our significant achievements despite the continued disruption of COVID-19 and the extraordinarily low interest rates of 2021. In recognition of these accomplishments and the Compensation Committee’s strong desire that Mr. Frederico continue his leadership as we execute on our multi-year strategy to transform our Company into a diversified financial services company with a dual focus on financial guaranty and asset management, the Compensation Committee granted Mr. Frederico long-term equity compensation with a target nominal value of $7,250,000, an increase of $250,000 from his grant for the 2020 performance year. Mr. Frederico’s total compensation for the 2021 performance year was composed of the following:
 
 
2021
Performance Year
 Compensation
2020
Performance Year Compensation
2019
Performance Year Compensation
Change
from
2020 to 2021
  Fixed Compensation—Base Salary (1)
$1,250,000 $1,250,000   $1,250,000 %
  Incentive Compensation      
  Cash Incentive Compensation $3,454,988   $2,979,625  
$3,727,000
16.0 %
  Long-Term Performance-Based Equity $4,350,000
(2)
$4,200,000
(2)
$4,050,000
(2)
3.6 %
  Long-Term Time-Based Equity $2,900,000
(2)
$2,800,000
(2)
$2,700,000
(2)
3.6 %
Total Direct Compensation $11,954,988   $11,229,625  
$11,727,000
6.5 %
(1)     Mr. Frederico’s base salary for each of the 2021, 2020 and 2019 performance years was established at the beginning of such performance year, in February. Accordingly, Mr. Frederico’s 2021 base salary was established in February 2021.
(2)     Represents the Compensation Committee’s target nominal value for the relevant performance year. The number of units granted is calculated by dividing such value by the average stock price over the 40 consecutive trading days ending on the date of grant.
]

48 Assured Guaranty 2022 Proxy Statement


The compensation package presented in the table above is different from the SEC-required disclosure in the Summary Compensation Table below and is not a substitute for the information in that table. Rather, it is intended to show how the Compensation Committee linked Mr. Frederico’s compensation and its components to our performance results and his achievements for the prior year. The base salary is paid during the performance year, while all of the components of the incentive compensation is based on achievements during the performance year and so is awarded in the first quarter of the following year.
Base Salary
Each February the Compensation Committee determines Mr. Frederico's base salary for that performance year. Consistent with the Compensation Committee's pay-for-performance philosophy, it has since 2017 chosen to maintain Mr. Frederico’s base salary at $1,250,000 and to use incentive compensation to reward him for his performance, experience and contributions and to motivate him to continue his leadership.
Cash Incentive
To determine Mr. Frederico’s cash incentive, as discussed above, the Compensation Committee used a formula that involved aggregating the weighted achievement scores for certain financial performance targets and individual non-financial objectives, and multiplying the result by Mr. Frederico’s Individual Target Cash Incentive Amount. Please refer to the diagram and discussion found above under “Executive Compensation Program Structure and Process—Components of Our Executive Compensation Program—Cash Incentive Compensation.”
Setting Mr. Frederico’s 2021 Financial Performance Targets
In February 2021, the Compensation Committee established targets for six financial performance measurements for Mr. Frederico (and for each other member of our senior leadership team) for the 2021 performance year. The financial performance targets were based on the business plan that the Board of Directors reviewed and approved in November 2020, and were designed to measure our progress in creating value for our shareholders. We include above under “Executive Compensation Program Structure and Process—Components of Our Executive Compensation Program” a detailed description of the financial performance measurements, and why the Compensation Committee considers them to be important in assessing our Company and the performance of each member of our senior leadership team. Five of the six targets are based on non-GAAP financial measures.
The Compensation Committee set all of the 2021 targets for the financial performance measurements above the 2020 actual results, some substantially, and viewed all of the 2021 targets as challenging in light of then current market conditions and the nature of our business model.
Mr. Frederico’s 2021 Financial Performance Target Scores
In 2021, we exceeded all but one of the six 2021 targets for the financial performance measures.
Core operating income per share of $5.91 was nearly 63% above our target and 90% above our actual 2020 results.
Core operating ROE was nearly 60% above our target and more than 65% above our actual 2020 results.
Core operating shareholders’ equity per share reached its highest level in our history, increasing nearly 13% from year-end 2020 and exceeding our goal by nearly 7%.
Core adjusted book value, which we refer to as Core ABV, per share increased by more than 13%, exceeded our goal by more than 6% and reached its highest level in our history.
The $361 million of PVP we produced was nearly 25% below our goal and also 7% below our achievement in 2020. Some of this shortfall can be attributed to the interest rate environment — the average 30-year AAA Municipal Market Data (MMD) rate (a measure of interest rates in our largest financial guaranty insurance market, U.S. public finance) for 2021 was 1.54%, below the 1.71% average for the prior year and a new historical low.
Our gross third-party gross assets raised were nearly 85% above our actual 2020 results and nearly 9% above our goal.
We achieved these results despite a persistently challenging business environment.
Financial services is a “people business”, and the travel and gathering restrictions tied to the COVID-19 pandemic were substantial obstacles to building new relationships.
Over the last several years, municipal bond yields have been at historically low levels, making our financial guaranty product less attractive to issuers and generally lowering the premium rate we may charge. As noted above, the average 30-year AAA MMD rate for 2021 was 1.54%, below the 1.71% average for the prior year and a new historical low.
The difference, or credit spread, between the 30-year A-rated general obligation relative to the 30-year AAA MMD averaged 33 bps in 2021, down from 42 bps in 2020. BBB credit spreads measured on the same basis averaged at 70 bps in 2021, significantly
49 Assured Guaranty 2022 Proxy Statement


tighter than the 121 bps average in 2020. Both the A and BBB credit spreads are at their narrowest levels in over a decade. Tighter credit spreads generally lower the premium rates the Company may charge.
We continued to face competition in an already tight market from a second financial guaranty insurer that focuses on a smaller portion of the market than we do and provides price competition in those markets where we overlap.
Despite the strides we have made in managing our capital, we believe we still have excess capital that we need regulatory approval to deploy, and therefore are constrained in our ability to improve our capital efficiency and core operating ROE.
The Compensation Committee assigned Mr. Frederico achievement scores for his achievements against each individual financial performance target, and then weighted his financial performance measurement scores in accordance with the cash incentive formula, which resulted in a weighted financial performance goal score of 82.1%:
2021 CEO Financial Performance Scorecard
 
 
2021 Targets 2021 Results Weighting 2021
Achievement
Score
(0%-200%)
Weighted
Achievement
Score
 Financial Performance Measurements*
 
 
 
 
 
 
 
 
 
 
Core operating income per diluted share $3.62 $5.91 11.17% 165% 18.4%
Core operating ROE 4.6% 7.3% 11.17% 170% 19.0%
Core operating shareholders’ equity per share $82.90 $88.26 11.17% 110% 12.3%
Core ABV per share $122.60 $130.33 11.17% 110% 12.3%
PVP $475 million $361 million 11.17% 75% 8.4%
Gross third-party assets raised
$2.7 billion
$3.0 billion
11.17%
105%
11.7%
Total Financial Performance Measurement Achievement Score
 
 
 
 
67.0%
 
 
82.1%













*    Five of the six financial performance measurements are based on non-GAAP financial measures, which are described on page __ under “Non-GAAP Financial Measures.”
50 Assured Guaranty 2022 Proxy Statement


Mr. Frederico’s Non-Financial Objectives
The Compensation Committee also evaluated Mr. Frederico’s 2021 achievements against his 2021 non-financial objectives. Highlights of those achievements include completing two plan support agreements in 2021, covering 74% of the Puerto Rico debt outstanding on December 31, 2021, and enabling a benefit against our expected losses related to Puerto Rico that was the primary driver of the $204 million economic benefit against our expected losses in the public finance sector; improved expected recoveries and performance of our insured RMBS portfolio; and successful management of capital by issuing new public debt and retiring higher interest debt, and by returning $562 million to shareholders while building our core businesses. This was accomplished while successfully navigating COVID-19 restrictions and taking important steps in environmental and social responsibility areas.
Non-Financial  Objectives 2021 Results
Insurance Growth—Articulate clear strategy and lead effective implementation of business plan to grow financial guaranty and related business globally
 
Expand U.S. public finance financial guaranty business
 
Expand global infrastructure financial guaranty business

Expand global structured finance financial guaranty business

Attempt to purchase bond insurance portfolios if they become available for purchase

Maintain strong financial strength ratings at insurance companies to facilitate articulated business strategies and periodically assess the financial strength ratings of each insurance company to determine whether to request that a
rating agency add or drop a rating from that company

Underwrote a total of $361 million of PVP despite continued low interest rates and credit spreads, as follows:
 
$235 million of U.S. Public Finance PVP
 
$79 million of International PVP
 
$47 million of Global Structured Finance PVP

 
U.S. Public Finance:
 
As a result of increased institutional demand for our insurance, in 2021, we insured $22.6 billion of new issue par on 1,076 individual transactions (including the Citi Field and Miami Seaport transactions, where we insured $609 million and $800 million of gross par, respectively)
 
Industry insured penetration rose to 8.2% of municipal par insured for 2021 in the primary market, the highest in a dozen years
 
The $22.6 billion that we insured in the primary market in 2021 was 15% higher than 2020, and 62% higher than 2019 (the last year not affected by the pandemic), and our highest insured par in a decade

International Public Finance:
 
Wrote $79 million of PVP, representing the third largest amount in over a decade, including the guarantee of a student housing transaction with University of Essex ($156 million par)
 
Sustained trend started in the fourth quarter of 2015 of writing new business in each quarter; opportunities continue to support our targets
 
Global Structured Finance:

Wrote $47 million of PVP, representing the second largest amount in over a decade (excluding a portfolio reinsurance transaction)
 

 
51 Assured Guaranty 2022 Proxy Statement


Non-Financial  Objectives 2021 Results
Insurance Loss Mitigation and Avoidance—Proactively manage financial guaranty portfolio to identify and avoid losses when stress develops and minimize losses when losses cannot be avoided
 
Use all available levers to creatively resolve Puerto Rico credits while minimizing losses to the Company
Completed two plan support agreements with the Federal Oversight Management Board for Puerto Rico and other important stakeholders in 2021, covering 74% of the insured Puerto Rico debt outstanding on December 31, 2021
 
Significantly improved expected recoveries and performance of RMBS portfolio
 
Asset Management and Alternative Investments—Lead effective implementation of asset management and alternative investment strategies
 
Grow assets under management (AUM) organically and/or through acquisitions
 
Improve yield on investment portfolio by investing a portion of excess capital in alternative investments
Raised $3.0 billion of inflows of third-party AUM, and now manage $16.1 billion in third-party AUM
 
Reduced AUM of wind down funds by 64% from $1,623 million to $582 million

Increased CLO fee-earning AUM and the recovery of previously deferred CLO fees, resulting in a 109% increase in CLO fees

Committed $209 million in additional insurance company capital into AssuredIM funds, bringing total committed capital in AssuredIM funds to $702 million

Capital invested in AssuredIM Funds generated $80 million in pretax equity in earnings, representing a blended return of 20.8%

Other alternative investments (not AssuredIM Funds) contributed $64 million in pretax equity in earnings
Capital Management—Articulate clear strategy to maintain optimal capital structure, considering internal risk measures and rating agency and regulatory requirements
 
Accumulate capital outside of insurance companies to support asset management and other strategies
 
Return excess capital to shareholders
Returned $562 million to our shareholders — $496 million by repurchasing 10.5 million of our Common Shares and $66 million through dividends
 
Issued $500 million of 10-year Senior Notes at an attractive rate of 3.15% in May and issued $400 million of 30-year Senior Notes at an attractive rate of 3.6% in August, benefiting the Company by (i) reducing the average coupon on $600 million of our debt from 5.89% to 3.35%, resulting in a $5.2 million annual debt service savings until the next debt maturity date; (ii) reducing the amount of debt coming due in 2024; and (iii) using some of the debt proceeds for share repurchases, all without significantly affecting leverage or interest coverage ratios
 
52 Assured Guaranty 2022 Proxy Statement


Non-Financial  Objectives 2021 Results
Regulatory—Maintain optimal corporate and regulatory structure and good standing to pursue the articulated business strategies
Completed merger of Municipal Assurance Corp. into Assured Guaranty Municipal Corp. on April 1, 2021, which simplified corporate structure and increased dividend capacity
 
Obtained approval for $250 million of insurance company assets to be drawn over a two-year period into AssuredIM Funds
 
Obtained approval for new Assured Guaranty Municipal and Assured Guaranty Corp. quota share reinsurance agreement
 
Obtained approval for arrangements supporting renewed European structured finance underwriting
Risk Management—Ensure that the Company has comprehensive, best-practice risk management with respect to all of its activities
 
Insure credits of good quality consistent with underwriting guidelines and consistent with risk appetite statement

Articulate and execute thorough enterprise risk management program
No unanticipated risk issues
 
Enhanced underwriting procedures to identify insurable credits with ample financial strength to withstand crisis caused by the COVID-19 pandemic; all new business within risk limits and risk appetite statement

Updated stress analysis of the pandemic’s impact on the insured portfolio; liquidity claims for 2021 remained nominal
 
Participated in periodic conference calls with regulators to focus on (i) Assured Guaranty’s processes for monitoring and reevaluating its exposure in light of changing economic conditions, (ii) any changes in the ability of obligors, especially municipal obligors, to make scheduled debt payments, and (iii) Assured Guaranty’s liquidity and solvency position under adverse stress scenario

Successful testing of Business Continuity Plan in 2021, as employees have been able to effectively work remotely since mid-March of 2020
 
Operations—Establish an environment of excellence in all areas of operations, including investment management, accounting and financial reporting, and legal and compliance, and provide a secure information technology environment
 

All financial statements and regulatory reports completed successfully and filed on time
 
Transitioned IT team to our new CTO while pivoting to a hybrid work schedule and layering pandemic response atop existing IT mandates
 
Successful Annual General Meeting, with shareholders supporting all proposals, including over 92% support of compensation paid to named executive officers

Extensive support and collaboration with IT Security to identify, analyze and address issues related to cybersecurity events

Successfully passed IT penetration testing

Successfully avoided ransomware and security attacks

Successful integration of AssuredIM IT systems, compliance regime, and office space

Successfully automated legacy accounting and investment accounting and reporting systems
53 Assured Guaranty 2022 Proxy Statement


Non-Financial  Objectives 2021 Results
Human Capital Management – Attract and retain talented employees, invest in the development of our people and strive for a diverse work force and an inclusive culture
 
Expanded recruiting process in an effort to reach a more diverse slate of candidates

Created and funded a strategic initiative to enhance educational opportunities for underserved populations in the New York City area as just one part of our philanthropic activities in support of our communities

Established Employee Resource Groups for Black / African American employees, women, and working parents

Issued statements (i) condemning religious hate crimes and discrimination, and (ii) opposing violence and discrimination against Asian American and Pacific Islander (AAPI) communities, and made contributions to various organizations that work to promote a more equitable society
Environmental and Social Responsibility – Pursue clear strategies for assessing and mitigating the long-term impact of climate change on the Company’s businesses, and pursue opportunities to be a good corporate citizen
Measured and disclosed greenhouse gas (GhG) emissions; GhG methodology and results are independently verified
 
Developed new underwriting criteria to address climate change risk

Created AssuredIM and Assured Healthcare Partners Environmental, Social and Governance (ESG) statements; conducted annual ESG review of investment portfolio

Developing an analysis of risk aggregation of the insured portfolio along the coastline for rising sea levels and hurricane 5 risks

Created employee-led Diversity and Inclusion (D+I) Committee

Held bias awareness training sessions for entire firm and continued work with D+I committee to expand employee diversity and provide for an inclusive corporate culture
 
Held D+I hosted events throughout the year
Based on Mr. Frederico’s 2021 achievements against his 2021 non-financial objectives, the Compensation Committee awarded him an achievement score of 170% against those objectives. Applying that score to the cash incentive formula resulted in a weighted non-financial objective score of 56.1%.
The Compensation Committee then added that weighted non-financial objective score of 56.1% to the weighted financial performance target score of 82.1% achieved by Mr. Frederico as described earlier, to derive a total achievement score of 138.2% in accordance with the cash incentive formula, as follows:
Summary 2021 CEO Performance Scorecard
Weighting 2021
Achievement
Score
(0%-200%)
Weighted Achievement
Score
Total Financial Performance Measurement Achievement Score (Summarized
 on page 50 above.)
67% 122.5% 82.1%
Non-Financial Objective Score 33% 170% 56.1%
Achievement Score 138.2%
In reviewing Mr. Frederico’s 2021 performance scorecard as a whole, the Compensation Committee determined that he had very strong performance. In particular, the Compensation Committee found that Mr. Frederico should be recognized for us exceeding all but one of our six financial performance targets set by the Compensation Committee for 2021, some of them by a very significant amount. The
54 Assured Guaranty 2022 Proxy Statement


Compensation Committee also deemed it to be important to recognize that our share price of $50.20 at December 31, 2021, had increased 59.4% from our share price of $31.49 on December 31, 2020. The Compensation Committee also considered the scorecard as a whole in light of the 20.1% reduction in Mr. Frederico's cash incentive compensation for the 2020 performance year, when we met only three of our six financial performance targets for 2020, versus the 2019 performance year. Given this very significant reduction for the prior performance year and the substantial outperformance of most of the six financial performance targets for the 2021 performance year, the Compensation Committee concluded that it was appropriate that Mr. Frederico’s short-term cash incentive payment increase appreciably.
Based on Mr. Frederico’s achievements, the Compensation Committee awarded him a total achievement score of 138.2% for the 2021 performance year, 15.9% above his achievement score of 119.2% for the 2020 performance year but still below the 149.1% achieved for the 2019 performance year. Applying this achievement score to his Individual Target Cash Incentive Amount resulted in a cash incentive award of $3,454,988. This was $457,363 (or 16%) more than the $2,979,625 awarded to Mr. Frederico for the 2020 performance year, but still $272,012 (or 7.3%) less than the $3,727,000 awarded to him for the 2019 performance year.
Equity Compensation
The Compensation Committee awarded all of Mr. Frederico’s long-term incentive compensation in the form of PSUs and RSUs. The $7,250,000 target nominal amount of long-term equity constituted less than a 4% increase over the target nominal amount for the prior year. The Compensation Committee wished to provide Mr. Frederico with a strong incentive to continue his valued leadership of our Company and to generate long-term, sustained growth that will enhance shareholder value as we continue our multi-year effort to establish AssuredIM in the asset management business while growing our insurance business, and so become the diversified dual-focused financial services company that we envision.
The following table sets forth the target nominal amount of long-term incentive compensation the Compensation Committee awarded Mr. Frederico on February 23, 2022, the grant date. The Compensation Committee determined the number of PSUs and RSUs to award Mr. Frederico by converting the target nominal amount of the award using $54.30, which was the average price of our Common Shares over the 40 consecutive trading days ending on February 23, 2022.
When we prepare the Summary Compensation Table, we report the value of the grants using U.S. generally accepted accounting principles (which we refer to as U.S. GAAP), in accordance with the SEC’s rules.
Under U.S. GAAP, the value of an ABV PSU as of February 23, 2022 was determined to be $56.69. This value is based on the closing price of our Common Shares on that date, which U.S. GAAP allows as a practical expedient to value grants with complicated features, such as in this case the estimated growth rate of the Company’s Core ABV per share.
Under U.S. GAAP, the value of a Relative TSR PSU on February 23, 2022 was $83.97. This value was computed using a Monte-Carlo simulation model taking into account the historical relationship of our TSR and the TSR of the Index, including for the period from the beginning of the Relative TSR PSU performance period to February 23, 2022, the grant date. We engaged Aon to provide this computation for us.
Under U.S. GAAP, the value of an RSU was $56.69, based our Common Share closing price on February 23, 2022.
Because the price of our Common Shares can be volatile, our Compensation Committee since 2012 has determined the number of shares to be granted to members of our senior leadership team by dividing the target nominal value of the equity it wished to award by the average price of our Common Shares over the 40 consecutive trading days ending on the grant date. As described above, U.S. GAAP valuations are based on the price of our Common Shares on the grant date. So, when the price of our Common Shares is higher on the grant date than the average price over the 40 previous consecutive trading days, the U.S. GAAP value will exceed our Compensation Committee’s target nominal value, as was the case this year, as well as last year. Similarly, when the price of our Common Shares is lower on the grant date than the average price over the 40 consecutive trading days ending on the grant date, the U.S. GAAP value will be less than our Compensation Committee’s target nominal value, as was the case in 2020. Our adoption of a Relative TSR PSU has exacerbated this effect, since price movements of our Common Shares from the beginning of the measurement period (the beginning of the year) to the grant date compared to the price movements of the Index have a material impact on the U.S. GAAP value of the TSR PSUs. Last year, the Compensation Committee’s target nominal value of the total long-term equity incentive grants was $7,000,000, while the U.S. GAAP value was $9,239,643, or nearly 32% more. This year, the movement of the price of our Common Shares was less dramatic during the relevant period than last year, so the difference between the Compensation Committee’s target nominal value and the U.S. GAAP value was not as large as last year. The Compensation Committee believes solely using the average over 40 consecutive trading days approach to sizing its long-term equity incentive grants is the fairest approach to use in light of the volatility of the price of our Common Shares.



55 Assured Guaranty 2022 Proxy Statement


The aggregate value of Mr. Frederico’s February 2022 long-term equity incentive grants under U.S. GAAP is set forth below.
Compensation Committee Target
Nominal Value
Equity
Granted
(Shares)
U.S. GAAP
Value
ABV PSUs $2,175,000   40,055 $2,270,718
Relative TSR PSUs $2,175,000   40,055 $3,363,418
RSUs $2,900,000   53,407 $3,027,643
TOTAL $7,250,000   133,517 $8,661,779
Perquisites
The Compensation Committee reviewed the executive perquisites provided to Mr. Frederico in 2021. The Compensation Committee noted the cost and personal inconvenience entailed in leading a Bermuda-based company with substantial operations in the U.S., U.K. and Europe, and evaluated the value of perquisites provided to Mr. Frederico against the values of perquisites provided to the chief executive officers of the six other Bermuda-based companies in our current executive compensation comparison group. Based on information in the 2021 proxy statements of those six companies, in 2020 Mr. Frederico received the lowest value of perquisites of the chief executive officers of Bermuda-based companies in our current executive compensation comparison group, and in 2021 he received less value than he received in 2020. On this basis, the Compensation Committee concluded that the value of perquisites provided to Mr. Frederico under our existing policies is reasonable.
OTHER NAMED EXECUTIVE OFFICER COMPENSATION DECISIONS
Non-Financial Objectives and Achievements of the Other Named Executive Officers
The Compensation Committee made compensation awards to the other named executive officers for the 2021 performance year based on its assessment of their achievements and Mr. Frederico’s review of their performance, as well as Mr. Frederico’s compensation recommendations. The other named executive officers’ achievements were evaluated based on their contributions to our achievement of our financial measurement targets, their contributions to the achievement of Mr. Frederico’s non-financial objectives, and their own achievements of the individual non-financial objectives Mr. Frederico had assigned to them, as described below.
Robert A. Bailenson, Chief Financial Officer
Mr. Bailenson was responsible in the 2021 performance year for meeting all internal and external financial requirements, managing our capital efficiently, meeting with investors, and participating on earnings calls. Mr. Bailenson has involved himself in all aspects of our business and leads the financial team in addressing market and regulatory changes. More specifically, Mr. Bailenson:
Successfully refinanced our $430 million of 100-year debt with interest rates ranging from 6 7/8% to 5.6%, plus $170 million of the $500 million of 5% senior notes we had due in 2024, with an issuance in May of $500 million of 3.15% senior notes due 2031 and an issuance in August of $400 million of 3.6% senior notes due 2051; also used some of the debt-issuance proceeds for general corporate purposes, primarily to fund our share repurchase program;
Successfully oversaw the automation of legacy accounting and investment accounting and reporting systems;
Held various meetings with rating agencies, which resulted in an upgrade of Assured Guaranty Corp., which we refer to as AGC, by Kroll Bond Rating Agency, Inc. to AA+ from AA;
Worked with Mr. Buzen to increase the efficiency and efficacy of our investment activities;
Actively participated in loss mitigation and settlement activities relating to Puerto Rico, as well as ensuring that the accounting reporting was appropriate;
Was responsible for the timely and accurate filing of all financial statements and tax returns; and
Acts as executive sponsor for our Working Parent Employee Resource Group.
Ling Chow, General Counsel
Ms. Chow is an effective leader of legal resources for our Company. Her work managing corporate governance and other issues before our Board was exemplary. Under Ms. Chow’s direction, we were able to navigate the complex compliance and regulatory environments of both the insurance and asset management segments of our business to accomplish our corporate objectives. More specifically, Ms. Chow:
Supervised the Legal department’s contribution to our efforts to mitigate losses on our insured Puerto Rico exposure, including negotiating support agreements, pursuing legal proceedings, and developing a short-term financing structure to facilitate anticipated claim payments;
56 Assured Guaranty 2022 Proxy Statement


Supervised the legal analysis and support for all our underwriting activity, including developing criteria to underwrite several new Structured Finance asset classes;
Managed litigation matters involving our financial guaranty business as well as our asset management business;
Provided legal advice on the various initiatives of our employee-led D+I Committee; and
Headed a Legal and HR team responsible for keeping abreast of COVID-19 developments and regulations in each of our offices around the world, in an effort to maintain the health and safety of all staff.
Russell B. Brewer II, Chief Surveillance Officer
Mr. Brewer was responsible in the 2021 performance year for ensuring that all of our insured exposures are reviewed annually and assigned appropriate internal ratings, for managing loss mitigation strategies for our troubled credits, and for overseeing our IT department. Mr. Brewer has been a major contributor to the successful operations of our company and has been a thought leader in our relationships with our rating agencies. (Effective December 31, 2021, Mr. Brewer resigned as Chief Surveillance Officer and became, effective January 1, 2022, Senior Advisor to Chief Executive Officer.) More specifically, Mr. Brewer:
Led the surveillance process for our $236 billion net par insured portfolio and the timely review and updating of internal ratings for our insured portfolio, helping to identify and intervene in deteriorating situations to avoid or mitigate losses;
Actively participated in periodic rating agency meetings including annual rating reviews and discussions to describe the risks faced from COVID-19 and strategies to address such risks while working in a full remote environment;
Oversaw and participated in many of our risk mitigation activities, including making major contributions to our effort in Puerto Rico;
Oversaw the automation of our legacy accounting and investment accounting and reporting systems;
Oversaw the successful transition of the IT team to our new Chief Technology Officer while pivoting to a hybrid work schedule and layering pandemic response atop existing IT mandates; and
Oversaw the effective defense of our systems from cyberattacks and our compliance with evolving cybersecurity regulations.
David A. Buzen, Chief Investment Officer and Head of Asset Management
Mr. Buzen was responsible in the 2021 performance year for guiding investment decisions for our investment portfolio and building our asset management business. More specifically, Mr. Buzen:
Oversaw the raising of $3.0 billion in gross third-party assets;
Successfully increased CLO fee-earning AUM and the recovery of previously deferred CLO fees, resulting in a 109% increase in CLO fees;
Used the knowledge base and experience of AssuredIM to expand the categories and types of investments included in our investment portfolio — capital invested in AssuredIM Funds generated $80 million in pretax equity in earnings in 2021, nearly double the $42 million generated in 2020, and representing a blended return of 20.8% in 2021; and
Convened a team of Finance, Investment, Workout and Legal personnel to develop a funding plan for anticipated Puerto Rico claim payments.
57 Assured Guaranty 2022 Proxy Statement


Compensation Decisions for the Other Named Executive Officers
The 2021 base salaries of our other named executive officers were set by the Compensation Committee in February 2021. Consistent with the Compensation Committee's pay-for-performance philosophy, it chose to set Mr. Bailenson's 2021 salary at the same level as 2020, and Mr. Buzen's 2021 salary at the same level as it had been set in August 2020 when he became Chief Investment Officer and Head of Asset Management, and to use incentive compensation to reward each of them for their performance, experience and contributions, and to motivate them to continue their leadership of their respective functions. In light of Ms. Chow’s achievements for the 2020 performance year and the complexity of the issues handled by the legal department, the Compensation Committee supported Mr. Frederico's recommendation to increase her salary to $600,000 from $550,000 for the 2021 performance year. In recognition of the steadiness with which Mr. Brewer manages both the surveillance and the information technology departments, the efforts of the surveillance department in analyzing the potential impact of COVID-19 on the insured portfolio, and Mr. Brewer’s recruitment of a new chief technology officer during the year, the Compensation Committee also supported Mr. Frederico's recommendation to increase Mr. Brewer's salary to $550,000 from $525,000 for the 2021 performance year. In February 2022 the Compensation Committee decided to maintain the 2022 salaries of all of the other named executive officers at their 2021 levels.
In the case of the other named executive officers, for the 2021 performance year the Compensation Committee calculated and aggregated the weighted achievement scores for the financial performance targets (which were the same as Mr. Frederico’s except in the case of Mr. Buzen, whose financial performance measures were more heavily weighted to gross third-party assets raised) and their non-financial objectives (which were a combination of their contribution to Mr. Frederico’s non-financial objectives and their achievement of their own individual non-financial objectives), taking into account the level of difficulty of achieving particular targets or objectives. Based on their achievements, after applying the formula, the Compensation Committee awarded them the cash incentives calculated as shown in the table below.
 
 
(
 
 
2021
Base
Salary
X
 
 
2021
Individual
Target
Cash
Incentive
Multiple
)
 
 
 
X
 
 
(
 
 
Financial
Performance
Measurement
Achievement
Score
(weighted
67%)
+
 
 
Individual
Non-
Financial
Objective
Achievement
Score
(weighted
33%)
)
 
 






=
2021 Cash
Incentive
Payout
 
 Robert A. Bailenson
 
 
 
$800,000
 
 
 
2.00x