# EDGAR Filing Document

**Accession Number:** 0000729522
**File Stem:** 0001193125-26-177001
**Filing Date:** 2026-4
**Character Count:** 202700
**Document Hash:** 7679942a84887462675930c50ba6c68d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-177001.hdr.sgml**: 20260424

**ACCESSION NUMBER**: 0001193125-26-177001

**CONFORMED SUBMISSION TYPE**: N-VPFS

**PUBLIC DOCUMENT COUNT**: 2

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260424

**DATE AS OF CHANGE**: 20260424

**EFFECTIVENESS DATE**: 20260424

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** VARIABLE SEPARATE ACCOUNT
- **CENTRAL INDEX KEY:** 0000729522

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** TX
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** N-VPFS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-03859
- **FILM NUMBER:** 26893369

**BUSINESS ADDRESS:**
- **STREET 1:** 2727-A ALLEN PARKWAY
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77019
- **BUSINESS PHONE:** 3107726000

**MAIL ADDRESS:**
- **STREET 1:** 2727-A ALLEN PARKWAY
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77019

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** VARIABLE SEPARATE ACCOUNT OF ANCHOR NATIONAL LIFE INSUR CO
- **DATE OF NAME CHANGE:** 19930408

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** AMERICAN PATHWAY II SEPARATE ACCOUNT OF ANCHOR NATIONAL LIFE
- **DATE OF NAME CHANGE:** 19920703

## Series and Classes Contracts Data

### VARIABLE SEPARATE ACCOUNT (Series ID: S000010595)

| Class ID   | Class Name                                   | Ticker Symbol   |
|:---|:---|:---|
| C000124664 | American Pathway II (G) 333-185797           |  |
| C000124666 | Polaris (G) 333-185798                       |  |
| C000124668 | Polaris II (G) 333-185799                    |  |
| C000124670 | Polaris II Platinum Series (G) 333-185800    |  |
| C000124672 | Polaris Protector (G) 333-185801             |  |
| C000124700 | Polaris Advisor (G) 333-185815               |  |
| C000124702 | Polaris Preferred Solution (G) 333-185816    |  |
| C000124705 | WM DIVERSIFIED STRATEGIES (G) 333-185818     |  |
| C000124708 | WM Diversified Strategies III (G) 333-185820 |  |
| C000124729 | PolarisAmerica (G) 333-185831                |  |
| C000124745 | Polaris Choice II (G) 333-185837             |  |
| C000124746 | Polaris Choice III (G) 333-185837            |  |
| C000124748 | Polaris Platinum II (G) 333-185838           |  |
| C000217261 | ICAP II (G)                                  |  |
| C000217262 | Vista Capital Advantage (G)                  |  |
| C000217263 | Anchor Advisor (G)                           |  |

**American Home Assurance Company**

**An AIG Company**

NAIC Code: 19380

Statutory Basis Financial Statements

As of December 31, 2025 and 2024

and for the years ended December 31, 2025, 2024 and 2023

![image_0.jpg](g161087image_0.jpg)

------

**AMERICAN HOME ASSURANCE COMPANY**

Statutory Basis Financial Statements

As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023

**<u>**TABLE OF CONTENTS**</u>**

---

| | | |
|:---|:---|:---|
| | [Report of Independent Auditors](#ie94bae22bda34224897d18accf48e5d7_7) | [3](#ie94bae22bda34224897d18accf48e5d7_7) |
| | [Statements of Admitted Assets](#ie94bae22bda34224897d18accf48e5d7_10) | [5](#ie94bae22bda34224897d18accf48e5d7_10) |
| | [Statements of Liabilities, Capital and Surplus](#ie94bae22bda34224897d18accf48e5d7_13) | [6](#ie94bae22bda34224897d18accf48e5d7_13) |
| | [Statements of Operations and Changes in Capital and Surplus](#ie94bae22bda34224897d18accf48e5d7_16) | [7](#ie94bae22bda34224897d18accf48e5d7_16) |
| | [Statements of Cash Flows](#ie94bae22bda34224897d18accf48e5d7_19) | [8](#ie94bae22bda34224897d18accf48e5d7_19) |
| [Note 1](#ie94bae22bda34224897d18accf48e5d7_22) | [Organization and Summary of Significant Statutory Basis Accounting Policies](#ie94bae22bda34224897d18accf48e5d7_22) | [9](#ie94bae22bda34224897d18accf48e5d7_22) |
| [Note 2](#ie94bae22bda34224897d18accf48e5d7_49) | [Accounting Adjustments to Statutory Basis Financial Statements](#ie94bae22bda34224897d18accf48e5d7_49) | [21](#ie94bae22bda34224897d18accf48e5d7_49) |
| [Note 3](#ie94bae22bda34224897d18accf48e5d7_58) | [Investments](#ie94bae22bda34224897d18accf48e5d7_58) | [23](#ie94bae22bda34224897d18accf48e5d7_58) |
| [Note 4](#ie94bae22bda34224897d18accf48e5d7_91) | [Fair Value of Financial Instruments](#ie94bae22bda34224897d18accf48e5d7_91) | [28](#ie94bae22bda34224897d18accf48e5d7_91) |
| [Note 5](#ie94bae22bda34224897d18accf48e5d7_100) | [Reserves for Losses and Loss Adjustment Expenses](#ie94bae22bda34224897d18accf48e5d7_100) | [30](#ie94bae22bda34224897d18accf48e5d7_100) |
| [Note 6](#ie94bae22bda34224897d18accf48e5d7_112) | [Related Party Transactions](#ie94bae22bda34224897d18accf48e5d7_112) | [33](#ie94bae22bda34224897d18accf48e5d7_112) |
| [Note 7](#ie94bae22bda34224897d18accf48e5d7_139) | [Reinsurance](#ie94bae22bda34224897d18accf48e5d7_139) | [36](#ie94bae22bda34224897d18accf48e5d7_139) |
| [Note 8](#ie94bae22bda34224897d18accf48e5d7_157) | [Income Taxes](#ie94bae22bda34224897d18accf48e5d7_157) | [38](#ie94bae22bda34224897d18accf48e5d7_157) |
| [Note 9](#ie94bae22bda34224897d18accf48e5d7_160) | [Capital and Surplus and Dividend Restrictions](#ie94bae22bda34224897d18accf48e5d7_160) | [43](#ie94bae22bda34224897d18accf48e5d7_160) |
| [Note 10](#ie94bae22bda34224897d18accf48e5d7_169) | [Contingencies](#ie94bae22bda34224897d18accf48e5d7_169) | [44](#ie94bae22bda34224897d18accf48e5d7_169) |
| [Note 11](#ie94bae22bda34224897d18accf48e5d7_190) | [Other Significant Matters](#ie94bae22bda34224897d18accf48e5d7_190) | [46](#ie94bae22bda34224897d18accf48e5d7_190) |
| [Note 12](#ie94bae22bda34224897d18accf48e5d7_214) | [Subsequent Events](#ie94bae22bda34224897d18accf48e5d7_214) | [48](#ie94bae22bda34224897d18accf48e5d7_214) |

---

------

**Report of Independent Auditors**

To the Board of Directors of American Home Assurance Company:

***Opinions***

We have audited the accompanying statutory basis financial statements of American Home Assurance Company (the "Company"), which comprise the statutory basis statements of admitted assets and of liabilities, capital and surplus as of December 31, 2025 and 2024, and the related statutory basis statements of operations and changes in capital and surplus, and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "financial statements").

*Unmodified Opinion on Statutory Basis of Accounting*

In our opinion, the accompanying financial statements present fairly, in all material respects, the admitted assets, liabilities, and capital and surplus of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in accordance with the accounting practices prescribed or permitted by the New York State Department of Financial Services described in Note 1.

*Adverse Opinion on U.S. Generally Accepted Accounting Principles*

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the accompanying financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2025 and 2024, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2025.

***Basis for Opinions***

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

*Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles*

As described in Note 1 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the New York State Department of Financial Services, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

***Emphasis of Matter***

As discussed in Notes 1, 6 and 7 to the financial statements, the Company has entered into significant transactions with certain affiliated entities. Our opinion is not modified with respect to this matter.

------

***Responsibilities of Management for the Financial Statements***

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the New York State Department of Financial Services. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the financial statements are available to be issued.

***Auditors' Responsibilities for the Audit of the Financial Statements***

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with US GAAS, we:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Exercise professional judgment and maintain professional skepticism throughout the audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ PricewaterhouseCoopers LLP

New York, New York

April 22, 2026

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

**Statements of Admitted Assets**

---

| | | |
|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2024** |
| Cash and invested assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bonds, primarily at amortized cost (fair value: 2025 - $13,910; 2024 - $12,465) | $**13891** | 12907 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stocks, at carrying value (cost: 2025 - $293; 2024 - $292) | **271** | 281 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stocks, at carrying value (cost: 2025 - $0; 2024 - $4) | **1** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other invested assets (cost: 2025 - $1,037; 2024 - $1,274) | **1353** | 1524 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans | **694** | 937 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivative instruments | **—** | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | **548** | 614 |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivable for securities sold | **19** | 17 |
| **Total cash and invested assets** | $**16777** | $**16306** |
| Investment income due and accrued | $**119** | $114 |
| Agents' balances or uncollected premiums: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Premiums in course of collection | **924** | 924 |
| &nbsp;&nbsp;&nbsp;&nbsp;Premiums and installments booked but deferred and not yet due | **317** | 251 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued retrospective premiums | **161** | 190 |
| High deductible recoverable on paid losses | **4** | 10 |
| Reinsurance recoverable on paid losses | **710** | 676 |
| Funds held by or deposited with reinsurers | **105** | 137 |
| Net deferred tax assets | **208** | 203 |
| Receivables from parent, subsidiaries and affiliates | **133** | 140 |
| Other assets | **158** | 125 |
| Allowance for uncollectible accounts | **(23)** | (17) |
| **Total admitted assets** | $**19593** | $**19059** |

---

**See Notes to Statutory Basis Financial Statements**

&nbsp;&nbsp;&nbsp;&nbsp;

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp; 5 STATEMENTS OF ADMITTED ASSETS – As of December 31, 2025 and 2024

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions, Except Share Information)**

**Statements of Liabilities, Capital and Surplus**

---

| | | |
|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2024** |
| **Liabilities** | | |
| Reserves for losses and loss adjustment expenses | $**8147** | $8069 |
| Unearned premium reserves | **2513** | 2506 |
| Commissions, premium taxes, and other expenses payable | **134** | 130 |
| Reinsurance payable on paid loss and loss adjustment expenses | **222** | 254 |
| Current federal and foreign taxes payable to parent | **60** | 4 |
| Funds held by company under reinsurance treaties | **1028** | 1143 |
| Provision for reinsurance | **46** | 54 |
| Ceded reinsurance premiums payable, net of ceding commissions | **792** | 726 |
| Collateral deposit liability | **246** | 265 |
| Payable for securities purchased | **132** | 30 |
| Payable to parent, subsidiaries and affiliates | **78** | 71 |
| Derivative instruments | **15** |  |
| Borrowed money | **5** |  |
| Other liabilities | **258** | 402 |
| &nbsp;&nbsp;**Total liabilities** | $**13676** | $**13654** |
| **Capital and Surplus** |  |  |
| Common capital stock, $30 par value, 1,758,158 shares authorized, 1,054,994 shares issued and outstanding | **32** | 32 |
| Capital in excess of par value | **4179** | 4179 |
| Unassigned surplus | **910** | 455 |
| Special surplus funds from reinsurance | **796** | 739 |
| &nbsp;&nbsp;**Total capital and surplus** | $**5917** | $**5405** |
| &nbsp;&nbsp;**Total liabilities, capital and surplus** | $**19593** | $**19059** |

---

**See Notes to Statutory Basis Financial Statements**

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

6 STATEMENTS OF LIABILITIES, CAPITAL and SURPLUS - As of December 31, 2025 and 2024

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

**Statements of Operations and Changes in Capital and Surplus**

---

| | | | |
|:---|:---|:---|:---|
| | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
| | **2025** | **2024** | **2023** |
| **Statements of Operations** |  |  |  |
| Underwriting income: |  |  |  |
| **Premiums earned** | $**4471** | $4145 | $4252 |
| Underwriting deductions: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses incurred | **2295** | 2109 | 2345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss adjustment expenses | **398** | 495 | 352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other underwriting expenses | **1183** | 1525 | 1425 |
| **Total underwriting deductions** | $**3876** | $**4129** | $**4122** |
| **Net underwriting gain (loss)** | $**595** | $**16** | $**130** |
| Investment gain: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment income earned | **863** | 736 | 781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized capital gains (loss) (net of capital gains tax expense (benefit): 2025 - $4; 2024 - $(23); 2023 - $(4)) | **(322)** | (230) | (153) |
| **Net investment gain (loss)** | $**541** | $**506** | $**628** |
| Net loss from agents' or premium balances charged-off | **(6)** |  | (1) |
| Other income (expense) | **(18)** | (32) | (19) |
| **Net Income (loss) after capital gains taxes and before federal income taxes** | **1112** | **490** | **738** |
| Federal and foreign income tax benefit (expense) | **277** | 85 | 16 |
| **Net Income (loss)** | $**835** | $**405** | $**722** |
| **Changes in Capital and Surplus** |  |  |  |
| Capital and surplus, as of December 31, previous year | $**5405** | $7111 | $7858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustment to beginning surplus (Note 2) | **(20)** | (14) | 25 |
| Capital and surplus, as of January 1, | **5385** | 7097 | 7883 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in accounting principles (refer to Note 2) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulative effect of changes in accounting principles | **—** |  | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other changes in capital and surplus: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Income | **835** | 405 | 722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in net unrealized capital (losses) gain (net of capital gain (loss) tax expense (benefit): 2025 - $50; 2024 - $7; 2023 - $(7)) | **209** | (24) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in net deferred income tax | **65** | (36) | (136) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in nonadmitted assets | **(72)** | (21) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in provision for reinsurance | **11** | (10) | (7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return of capital | **—** | (1604) | (946) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in par value of common stock | **—** | 4 | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends to stockholder | **(475)** | (540) | (450) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange translation | **(41)** | 134 | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in assumed mortgage guaranty contingency reserve | **—** | (2) | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in ceded mortgage guaranty contingency reserve | **—** | 2 | 4 |
| **Total changes in capital and surplus** | **532** | **(1692)** | **(772)** |
| **Capital and Surplus, as of December 31,** | $**5917** | $**5405** | $**7111** |

---

**See Notes to Statutory Basis Financial Statements**

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

7 STATEMENTS OF OPERATIONS and CHANGES IN CAPITAL AND SURPLUS - for the years ending December 31, 2025, 2024 and 2023

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

**Statements of Cash Flows**

---

| | | | |
|:---|:---|:---|:---|
| | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
| | **2025** | **2024** | **2023** |
| **Cash from Operations:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Premiums collected, net of reinsurance | $**4287** | $4335 | $4589 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net investment income | **812** | 707 | 696 |
| &nbsp;&nbsp;&nbsp;&nbsp;Miscellaneous income (expense) | **(16)** | 17 | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Sub-total** | **5083** | **5059** | **5311** |
| &nbsp;&nbsp;&nbsp;&nbsp;Benefit and loss related payments | **2151** | 2282 | 2663 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commission and other expense paid | **1590** | 1840 | 1797 |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal and foreign income taxes recovered | **238** | 66 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided from (used in) operations** | $**1104** | $**871** | $**844** |
| **Cash from Investments:** |  |  |  |
| **Proceeds from investments sold, matured, or repaid:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bonds | **3470** | 5149 | 4458 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stocks | **1** | 26 | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans | **269** | 197 | 373 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other investments | **554** | 392 | 345 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total proceeds from investments sold, matured, or repaid** | $**4294** | $**5764** | $**5231** |
| **Cost of investments acquired:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bonds | **4119** | 4181 | 3984 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stocks | **-** | 1 | 119 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans | **33** | 25 | 289 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other investments | **242** | 86 | 163 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total cost of investments acquired** | **4394** | **4293** | **4555** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided from (used in) investing activities** | $**(100)** | $**1471** | $**676** |
| **Cash from Financing and Miscellaneous Sources:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Return of capital | **—** | (1604) | (946) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in par value of common stock | **—** | 4 | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;Intercompany payments | **(453)** | (119) | (293) |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends to stockholder | **(475)** | (540) | (450) |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowed fund repaid | **5** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net deposit activity on deposit-type contracts and other insurance | **(1)** | (1) | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Collateral deposit liability receipts | **(19)** | 3 | (154) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other receipts (payments) | **(127)** | 88 | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided from (used in) financing and miscellaneous activities** | $**(1070)** | $**(2169)** | $**(1799)** |
| **Net change in cash, cash equivalents and short-term investments** | **(66)** | 173 | (279) |
| **Cash, cash equivalents, and short-term investments:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Beginning of year** | **614** | **441** | **720** |
| &nbsp;&nbsp;&nbsp;&nbsp;**End of year** | $**548** | $**614** | $**441** |
| &nbsp;&nbsp;&nbsp;&nbsp;Refer to Note 11D for description of non-cash items. |  |  |  |

---

**See Notes to Statutory Basis Financial Statements**

&nbsp;&nbsp;&nbsp;&nbsp;

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8 STATEMENTS OF CASH FLOW – for the years ended December 31, 2025, 2024 and 2023

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

 **1.&nbsp;&nbsp;&nbsp;&nbsp;Organization and Summary of Significant Statutory Basis Accounting Policies**

***A.Basis of Organization and Presentation***

***Organization***

American Home Assurance Company ("the Company" or "American Home") is a direct wholly-owned subsidiary of AIG Property Casualty U.S., Inc. ("AIG PC US"), a Delaware corporation, which is in turn owned by AIG Property Casualty Inc. ("AIG PC"), a Delaware corporation. The Company's ultimate parent is American International Group, Inc. (the "Ultimate Parent" or "AIG"). AIG conducts its property and casualty operations through multiple line companies writing substantially all commercial (casualty, property, specialty and financial liability) and consumer (accident & health and personal lines) insurance both domestically and abroad.

The Company is party to an inter-company pooling agreement (the "Combined Pooling Agreement"), among the seventeen companies listed below; collectively named the Combined Pool. Effective January 1, 2025, the Combined Pooling Agreement was amended and restated to include three new Pool members. The member companies of the Combined Pool, their National Association of Insurance Commissioners ("NAIC") company codes, inter-company pooling percentages under the Combined Pooling Agreement, and states of domicile, are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Company** | **NAIC Company** | **Pool Participation<br>Percentage as of January 1, 2025** | **Pool Participation<br>Percentage as of December 31, 2024** | **State of<br>Domicile** |
| National Union Fire Insurance Company of Pittsburgh, Pa. (National Union)\* | 19445 | 35% | 35% | Pennsylvania |
| American Home Assurance Company (American Home) | 19380 | 32% | 32% | New York |
| Lexington Insurance Company (Lexington) | 19437 | 30% | 30% | Delaware |
| Commerce and Industry Insurance Company (C&I) | 19410 | 3% | 3% | New York |
| AIG Property Casualty Company (APCC) | 19402 | 0% | 0% | Illinois |
| The Insurance Company of the State of Pennsylvania (ISOP) | 19429 | 0% | 0% | Illinois |
| New Hampshire Insurance Company (New Hampshire) | 23841 | 0% | 0% | Illinois |
| AIG Specialty Insurance Company (Specialty) | 26883 | 0% | 0% | Illinois |
| AIG Assurance Company (Assurance) | 40258 | 0% | 0% | Illinois |
| Granite State Insurance Company (Granite) | 23809 | 0% | 0% | Illinois |
| Illinois National Insurance Co. (Illinois National) | 23817 | 0% | 0% | Illinois |
| AIU Insurance Company (AIU) | 19399 | 0% | 0% | New York |
| Glatfelter Insurance Company (Glatfelter) | 26611 | 0% | 0% | Delaware |
| Marbleshore Specialty Insurance Company (Marbleshore) | 13551 | 0% | 0% | Delaware |
| Western World Insurance Company (Western World) | 13196 | 0% | N/A | New Hampshire |
| Stratford Insurance Company (Stratford) | 40436 | 0% | N/A | New Hampshire |
| Tudor Insurance Company (Tudor) | 37982 | 0% | N/A | New Hampshire |
| \* Lead Company of the Combined Pool | \* Lead Company of the Combined Pool | \* Lead Company of the Combined Pool | \* Lead Company of the Combined Pool | \* Lead Company of the Combined Pool |

---

As shown in the table above, the Company's participation in the Combined Pool remained the same. As such, there were no changes to the Company's *Total capital and surplus* on January 1, 2025 as a consequence of the amendment to the Combined Pooling Agreement.

Refer to Note 6 for additional information on the Combined Pool and the effects of the changes in the intercompany pooling arrangements (the "2025 Repooling Transaction").

The 2025 Repooling Transaction is presented in the supporting loss schedules as an adjustment to the opening balances so that the activity for the period is not distorted by the effects of this transaction.

The Company accepts commercial business primarily through a network of independent retail and wholesale brokers and through independent agency networks. In addition, the Company accepts consumer business primarily through agents and brokers, as well as through direct marketing and partner organizations. There were no Managing Agents or Third Party Administrators who placed direct written premium with the Company in an amount exceeding more than 5.0 percent of surplus of the Company for the years ending December 31, 2025, 2024, and 2023.

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9 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

The Company is diversified in terms of classes of its business, distribution network and geographic locations. The Company has direct written premium concentrations of 5.0 percent or more in the following locations:

---

| | | | |
|:---|:---|:---|:---|
| **State / Location** | **2025** | **2024** | **2023** |
| California | $**52** | $48 | $58 |
| Florida | **50** | 51 | 54 |
| United Arab Emirates | **91** | 85 | 80 |
| New York | **41** | 52 | 46 |
| Texas | **30** | 23 | 24 |

---

***Basis of Presentation***

The accompanying financial statements of the Company have been prepared in conformity with accounting practices prescribed or permitted by the New York State Department of Financial Services ("NY SAP"). Certain balances relating to prior periods have been reclassified to conform to the current year's presentation.

Additionally, the financial statements include the Company's U.S. and foreign operations, along with its Dubai, Caribbean, Jamaica and Argentina branch operations.

The Company's financial information as of and for the years ended December 31, 2025, 2024 and 2023 have been presented in accordance with the terms of the Combined Pooling Agreement.

***B. Permitted and Prescribed Practices***

NY SAP recognizes only statutory accounting practices prescribed or permitted by the New York State Department of Financial Services ("NY DFS") for determining and reporting the financial position and results of operations of an insurance company and for the purpose of determining its solvency under the New York Insurance Code. The NAIC Statutory Accounting Principles included within the Accounting Practices and Procedures Manual ("NAIC SAP") have been adopted as a component of prescribed practices by the NY DFS. The Superintendent of the NY DFS (the "Superintendent") has the right to permit other specific practices that differ from prescribed practices.

NY SAP has prescribed the practice of discounting workers' compensation known case loss reserves on a non-tabular basis. This practice is not prescribed under NAIC SAP.

Accounting practices prescribed by the Insurance Department of the Commonwealth of Pennsylvania ("PA SAP") provide for the availability of certain offsets in the calculation of the *Provision for reinsurance*, which offsets are not prescribed under NAIC SAP. The Company applied PA SAP with concurrence from the NY DFS to reflect the transfer of collection risk on certain of the Company's asbestos related reinsurance recoverable balances, to an authorized third party reinsurer, as another form of collateral acceptable to the Commissioner with respect to the reinsurance recoverable balance from the original reinsurers.

The Company applied a permitted practice to account for the retroactive aggregate excess of loss reinsurance arrangement entered into with National Indemnity Company ("NICO"), a subsidiary of Berkshire Hathaway, Inc., (the "ADC") as prospective reinsurance. However, any gain associated with the ADC has been reported in a segregated surplus account and does not form part of the Company's *Unassigned surplus*, subject to the applicable dividend restrictions; such amounts must be restricted in surplus until such time as payments received from NICO exceed premiums paid for the retrocession. Segregated surplus balances were $789, $731 and $627 at December 31, 2025, 2024 and 2023, respectively. The effects of the ADC comprise the majority of total segregated surplus; accordingly, Statutory surplus, NAIC SAP, excluding segregated surplus was $4,864, $4,446, $6,285, at December 31, 2025, 2024 and 2023, respectively. For more information, see Note 7.

The use of the aforementioned permitted and prescribed practices has not affected the Company's ability to comply with the NY DFS's risk based capital ("RBC") and surplus requirements for the 2025, 2024 and 2023 reporting periods.

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10 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

A reconciliation of the net income (loss) and capital and surplus between NAIC SAP and practices prescribed or permitted by NY SAP is shown below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ***December 31,*** | **SSAP #** | **FS Ref** | **2025** | **2024** | **2023** |
| **Net Income, NY SAP** |  |  | $**835** | $405 | $722 |
| State prescribed or permitted practices - addition (charge): |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Change in non-tabular discounting | 65 | (a) | **6** | 50 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adverse Development Cover | 62 | (b) | **—** |  |  |
| **Net Income , NAIC SAP** |  |  | $**829** | $**355** | $**707** |
| **Statutory surplus, NY SAP** |  |  | $**5917** | $5405 | $7111 |
| State prescribed or permitted practices - addition (charge): |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-tabular discounting | 65 | (a) | **208** | 203 | 152 |
| &nbsp;&nbsp;&nbsp;&nbsp; Credits for collection risk on certain asbestos reinsurance recoveries | 62 | (c) | **49** | 28 | 40 |
| **Statutory surplus, NAIC SAP** |  |  | $**5660** | $**5174** | $**6919** |

---

(a)Impacts *Reserves for losses and loss adjustment expenses* within the *Statements of Liabilities, Capital and Surplus and Losses incurred* within the *Statements of Operations and Changes in Capital and Surplus*.

(b)Impacts *Reserves for losses and loss adjustment expenses, Retroactive reinsurance payable* and *Retroactive reinsurance reserves - ceded* within the *Combined Statements of Liabilities, Capital and Surplus*, and *Losses incurred* and *Other income* within the *Combined Statements of Operations and Changes in Capital and Surplus*.

(c)Impacts *Provision for reinsurance within the Statements of Liabilities, Capital and Surplus* and the change in *Provision for reinsurance within the Statements of Operations and Changes in Capital and Surplus*.

***C.Use of Estimates in the Preparation of the Financial Statements***

The preparation of statutory basis financial statements in accordance with NY SAP requires the application of accounting policies that often involve a significant degree of judgment. The Company's accounting policies that are most dependent on the application of estimates and assumptions are considered critical accounting estimates and are related to the determination of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Loss reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reinsurance assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fair value of certain financial assets, impacting those investments measured at fair value in the *Statements of Admitted Assets, Liabilities, Surplus and Other Funds*, as well as unrealized gains (losses) included in capital and surplus; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Income tax assets and liabilities, including the recoverability and admissibility of net deferred tax assets.

These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, the Company's statutory basis financial condition, results of operations and cash flows could be materially affected.

***D.Accounting Policy Differences***

NAIC SAP is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America ("US GAAP"). NAIC SAP varies from US GAAP in certain significant respects, including:

---

| | | |
|:---|:---|:---|
| **Transactions** | **NAIC SAP Treatment** | **US GAAP Treatment** |
| **Policy Acquisition Costs**<br>Principally brokerage commissions and premium taxes arising from the issuance of insurance contracts. | Costs are immediately expensed and are included in *Other Underwriting Expenses*, except for reinsurance ceding commissions received in excess of the cost to acquire business which are recognized as a deferred liability and amortized over the period of the reinsurance agreement. | Costs directly related to the successful acquisition of new or renewal insurance contracts are deferred and amortized over the term of the related insurance coverage. |
| **Unearned Premiums, Unpaid Losses and Loss Expense Liabilities** | Presented net of reinsurance. | Presented gross of reinsurance with corresponding reinsurance recoverable assets for ceded unearned premiums and reinsurance recoverable on unpaid losses. |

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11 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | |
|:---|:---|:---|
| **Transactions** | **NAIC SAP Treatment** | **US GAAP Treatment** |
| **Retroactive reinsurance contracts** | Gains and losses are recognized in earnings immediately and surplus is segregated to the extent pretax gains are recognized. Certain retroactive affiliate or related party reinsurance contracts are accounted for as prospective reinsurance if there is no gain in surplus as a result of the transaction. | Gains are deferred and amortized over the settlement period of the ceded claim recoveries. Losses are immediately recognized in the *Statements of Operations.* |
| **Investments in Bonds held as:**<br>1) available for sale<br>2) fair value option | Investment grade securities (rated by NAIC as class 1 or 2) are carried at amortized cost. Non-investment grade securities (NAIC rated 3 to 6) are carried at the lower of amortized cost or fair value. | All available for sale investments are carried at fair value with changes in fair value, net of applicable taxes, reported in accumulated other comprehensive income within shareholder's equity.<br>Fair value option investments are carried at fair value with changes in fair value, net of applicable projected income taxes, reported in *Net Investment Income*. |
| **Investments in Common Stocks** | Carried at fair value with unrealized gains and losses reported, net of applicable taxes, in the *Statements of Changes in Capital and Surplus*. | All equity securities that do not follow the equity method of accounting, are measured at fair value with changes in fair value recognized in earnings. |
| **Investments in Limited Partnerships, Hedge Funds and Private Equity Interests** | Carried at the underlying US GAAP equity with results from the investment's operations recorded, net of applicable taxes, as unrealized gains (losses) directly in the *Statements of Changes in Capital and Surplus*. | If aggregate interests allow the holding entity to exercise more than significant influence (typically more than 3%), the investment is recorded as an equity method investment wherein the pool's pro rata share of income or loss for the period, is recorded as net investment income and adjusted against the carrying value of the asset. Similar equity method investments in investment company entities (e.g.: hedge funds) is adjusted for the pool's pro rata share of income or loss for the period which is based on the Net Asset Value ("NAV") with changes in value recorded to *Net Investment Income*.<br>Where the aggregate interests do not allow the entity to exercise significant influence (typically less than 3%), the investment is recorded as equity investment fair valued through net investment income. Similar equity investment in investment companies (e.g.: hedge funds) are recorded at NAV with changes in value recorded to *Net Investment Income*. |
| **Investments in Subsidiary, Controlled and Affiliated Entities (SCAs)** | Subsidiaries are not consolidated. | Consolidation is required when there is a determination that the affiliated entity is a variable interest entity ("VIE") and the reporting entity has a variable interest and the power to direct the activities of the VIE. The VIE assessment would consider various factors including limited partnership (LP) status and inherent rights of equity investors. |
|  | The equity investment in SCAs are accounted for under the equity method and recorded as Common stock investments. Dividends are recorded within *Net Investment Income*. | Investments in SCAs that are voting interest entities (VOE) with majority voting rights are generally consolidated. |
|  |  | Investments in SCAs where the holding entity exercises significant influence (generally ownership of >3% voting interests for LPs and similar entities and between 20 percent and 50 percent for other entities) are recorded at equity value. The change in equity is included within *Net Investment Income*. |

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12 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | |
|:---|:---|:---|
| **Transactions** | **NAIC SAP Treatment** | **US GAAP Treatment** |
| **Other-than-temporary impairments** | Bonds, other than loan-backed and structured securities, which are considered to be other-than-temporarily impaired, are written down to fair value with a realized loss recognized in the *Consolidated Statements of Operations.* | The non-credit portion of impairments relating to debt securities that the entity does not intend to sell and for which it is not more likely than not that the entity will be required to sell before anticipated recovery is recorded in other comprehensive income. |
| **Derivatives** | Embedded derivatives are not separated from the host contract and not accounted for separately as derivative instruments. | Contracts may include embedded derivatives that are bifurcated from the host contracts and accounted for separately at fair value. |
| **Statement of Cash Flows** | Statutory *Statements of Cash Flows* must be presented using the direct method. Changes in cash, cash equivalents, and short-term investments and certain sources of cash are excluded from operational cash flows.  | The *Statements of Cash Flows* can be presented using the direct or indirect methods, however are typically presented using the indirect method. Presentation is limited to changes in cash and cash equivalents (short-term investments are excluded). |
| **Deferred Federal Income Taxes** | Deferred income taxes are established for the temporary differences between tax and book assets and liabilities, subject to limitations on admissibility of tax assets.<br>Changes in deferred income taxes are recorded within capital and surplus and have no impact on the *Statements of Operations*. | The provision for deferred income taxes is recorded as a component of income tax expense, as a component of the *Statements of Operations*, except for changes associated with items that are included within other comprehensive income where such items are recorded net of applicable income taxes. |
| **Statutory Adjustments**<br>(applied to certain assets including goodwill, furniture and equipment, prepaid expenses, overdue receivable balances and unsecured reinsurance amounts) | Certain asset balances designated as nonadmitted, such as some intangible assets and certain investments in affiliated entities are excluded from the *Statements of Admitted Assets* and are reflected as deductions from capital and surplus. | All assets and liabilities are included in the financial statements. Provisions for uncollectible receivables are established as valuation allowances and are recognized as expense within the *Statements of Operations*. |
| **Stock Repurchase** | When a reporting entity's stock is acquired and retired the cost of the acquired and retired stock reduces statutory surplus. The capital stock account shall be reduced by the par value of the acquired and retired stock and the paid-in or contributed surplus is reduced by the excess of cost over par value or stated value. | The cost of a repurchase of shares in excess of par is allocated between additional paid-in capital and retained earnings or the excess may be charged entirely to retained earnings. |

---

The effects on the financial statements of the variances between NAIC SAP and US GAAP, although not reasonably determinable, are presumed to be material.

***E.Significant Statutory Accounting Policies***

<u><br></u>

***Premiums***

***Premiums***

Premiums for insurance and assumed reinsurance contracts are recorded as gross premiums written as of the effective date of the policy. Premiums are earned primarily on a pro-rata basis over the term of the related insurance coverage. Premiums collected prior to the effective date of the policy are recorded as an advance premium liability and not considered income until due. Extended reporting endorsements are reflected as premiums written and are earned on a pro-rata basis over the stated term of the endorsement unless the term of the endorsement is indefinite, in which case premiums are fully earned at inception of the endorsement along with the recognition of associated loss and loss adjustment expense ("LAE").

Unearned premium reserves are established on an individual policy basis, reflecting the terms and conditions of the coverage being provided. Unearned premium reserves represent the portion of premiums written relating to the unexpired terms of coverage as of the date of the financial statements. For policies with coverage periods equal to or greater than thirteen months and generally not subject to cancellation or modification by the Company, premiums are earned using a prescribed percentage of completion method. Additional unearned premium reserves for policies exceeding thirteen months are established as greater of three prescribed tests.

Reinsurance premiums are typically earned over the same period as the underlying policies, or risks, covered by the contracts. As a result, the earnings pattern of a reinsurance contract generally written for a 12 month term may extend up to 24 months, reflecting the inception dates of the

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13 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

underlying attaching policies throughout the 12 month period of the reinsurance contract. Reinsurance premiums ceded are recognized as a reduction in revenues over the period reinsurance coverage is provided.

Insurance premiums billed and outstanding for 90 days or more are nonadmitted and charged against *Unassigned funds (surplus).*

Premiums for retrospectively rated contracts are initially recorded based on the expected loss experience and are earned on a pro-rata basis over the term of the related insurance coverage. Additional or returned premium is recorded if the estimated loss experience differs from the initial estimate and is immediately recognized in earned premium. The Company records accrued retrospectively rated premiums as written premiums. Adjustments to premiums for changes in the level of exposure to insurance risk are generally determined based upon audits conducted after the policy expiration date.

Gross written premiums net of ceded written premiums ("Net written premiums") that were subject to retrospective rating features as of December 31, 2025, 2024 and 2023 were as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Years ended December 31,** | **2025** | **2024** | **2023** |
| Net written premiums subject to retrospectively rated contracts | $**34** | $32 | $40 |
| Percentage of total net written premiums | **0.8%** | 0.8% | 0.9% |

---

As of December 31, 2025 and 2024, the admitted portion of accrued premiums related to the Company's retrospectively rated contracts were $161 and $190, respectively, which will be billed in future periods based primarily on the payment of the underlying expected losses and LAE. Unsecured amounts associated with these accrued retrospective premiums were $28 and $40 as of December 31, 2025 and 2024, respectively. Ten percent of the amount of accrued retrospective premiums receivable not offset by retrospective return premiums or other liabilities to the same party, other than loss and LAE reserves, or collateral (collectively referred to as the unsecured amount) have been nonadmitted in the amount of $4 and $4 as of December 31, 2025 and 2024, respectively.

***High Deductible***

The Company establishes loss reserves for high deductible policies net of the insured's contractual deductible (such deductibles are referred to as "reserve credits"). The Company establishes a nonadmitted asset for ten percent of paid losses recoverable in excess of collateral held on an individual insured basis, or for one hundred percent of paid losses recoverable where no collateral is held and amounts are outstanding for more than ninety days. Additionally, the Company establishes an allowance for doubtful accounts for such paid losses recoverable in excess of collateral and after nonadmitted assets. Similarly, the Pool does not recognize reserve credit offsets to its estimate of loss reserves where such credits are deemed uncollectible, as the Company ultimately bears credit risk on the underlying policies' insurance obligations.

The following tables show the counterparty exposure on unpaid claims and billed recoverable on paid claims for high deductibles by line of business, as of December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Gross Loss Reserves** | **Reserve Credits on Unpaid Claims** | **Recoverable on Paid Claims** | **Total** |
| **Auto Liability** | $**744** | $**622** | $**1** | $**623** |
| **General Liabilities** | **631** | **592** | **1** | **593** |
| **Workers Compensation** | **3698** | **3177** | **5** | **3182** |
| **Total** | $**5073** | $**4391** | $**7** | $**4398** |

---

As of December 31, 2025, both on-balance sheet and off-balance sheet collateral pledged to the Company related to deductible and paid recoverables was $107 and $2,979, respectively. Unsecured high deductible amounts related to unpaid claims and for paid recoverables for 2025 were $1,311, or 30% of the total high deductible. Additionally, as of December 31, 2025, the Company had recoverables on paid claims greater than 90 days overdue of $4, of which $2 have been nonadmitted.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Gross Loss Reserves** | **Reserve Credits on Unpaid Claims** | **Recoverable on Paid Claims** | **Total** |
| Auto Liability | $639 | $544 | $2 | $546 |
| General Liabilities | 554 | 519 | 2 | 521 |
| Workers Compensation | 3306 | 2781 | 10 | 2791 |
| **Total** | $**4499** | $**3844** | $**14** | $**3858** |

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14 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

As of December 31, 2024, both on-balance sheet and off-balance sheet collateral pledged to the Company related to deductible and paid recoverables was $127 and $2,636, respectively. Unsecured high deductible amounts related to unpaid claims and for paid recoverables for 2024 were $1,094, or 28% of the total high deductible. Additionally, as of December 31, 2024, the Company had recoverables on paid claims greater than 90 days overdue of $8, of which $4 have been nonadmitted.

The following table shows the deductible amounts for the highest ten unsecured high deductible policies as of December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
| **Counterparty\*** | **Unsecured High Deductible Amounts** | **Unsecured High Deductible Amounts** |
| **December 31,** | **2025** | **2024** |
| **Counterparty 1** | $**111** | $100 |
| **Counterparty 2** | **86** | 84 |
| **Counterparty 3** | **70** | 70 |
| **Counterparty 4** | **69** | 45 |
| **Counterparty 5** | **51** | 45 |
| **Counterparty 6** | **44** | 44 |
| **Counterparty 7** | **36** | 36 |
| **Counterparty 8** | **29** | 21 |
| **Counterparty 9** | **28** | 20 |
| **Counterparty 10** | **22** | 19 |

---

\*Actual counterparty is not named and may vary year over year. Additionally, a group of entities under common control is regarded as a single counterparty.

***Deposit Accounting***

Direct insurance transactions where management determines there is insufficient insurance risk transfer are recorded as deposits unless the policy was issued (i) in respect of the insured's requirement for evidence of coverage pursuant to applicable statutes (insurance statutes or otherwise), contractual terms or normal business practices, (ii) in respect of an excess insurer's requirement for an underlying primary insurance policy in lieu of self-insurance, or (iii) in compliance with filed forms, rates and/or rating plans.

Assumed and ceded reinsurance contracts, which do not transfer a sufficient amount of insurance risk are recorded as deposits with the net consideration paid or received recognized as a deposit asset or liability, respectively. Deposit assets are admitted if (i) the assuming company is licensed, accredited or qualified by the PA DOI, or (ii) the collateral (i.e., funds withheld, letters of credit or trusts) provided by the reinsurer meets all the requirements of the NY SAP, as applicable. The deposit asset or liability is adjusted by calculating the effective yield on the deposit to reflect the actual payments made or received to date and expected future payments with a corresponding credit or charge to *Other Income (Expense)* in the *Statements of Operations*.

Deposit assets are recorded to *Other assets* within the *Statements of Admitted Assets*, refer to Note 11A. Deposit liabilities are recorded to *Other liabilities* within the *Statements of Liabilities, Capital and Surplus*, refer to Note 11B.

***Premium Deficiency***

The Company periodically reviews its expected ultimate losses with respect to its unearned premium reserves. A premium deficiency loss and related liability are established if the unearned premium reserves and related future investment income are collectively not sufficient to cover the expected ultimate loss projection. For purposes of premium deficiency tests, contracts are grouped in a manner consistent with the manner in which the insurance contracts are acquired, serviced, and measured for the profitability of such contracts. As of December 31, 2025 and 2024, the Company did not incur any premium deficiency losses.

***Retroactive Reinsurance***

Reinsurance transactions involving the transfer of loss and LAE reserves associated with loss events that occurred prior to the effective date of the transfer are recorded as retroactive reinsurance and reported separately from *Reserves for losses and loss adjustment expenses* in the *Statements of Liabilities, Capital and Surplus*. Initial pre-tax gains or losses are recorded in *Retroactive reinsurance gain* within the *Statements of Operations and Changes in Capital and Surplus* with surplus gains recorded as *Special surplus funds from reinsurance,* which is a component of *Capital and Surplus* that is restricted from dividend payment. Amounts recorded in *Special surplus funds from reinsurance* are considered to be earned surplus (i.e., transferred to *Unassigned surplus*) only when, and to the extent that, cash recoveries from the assuming entity exceed the consideration paid by the ceding entity. *Special surplus funds from reinsurance* are maintained separately for each respective retroactive reinsurance agreement. *Special surplus funds from reinsurance* account write-in entry on the balance sheet is adjusted, upward or downward, to reflect any subsequent increase or reduction in reserves ceded. The reduction in the special surplus funds is limited to the lesser of amounts recovered by the Company in excess of consideration paid or the surplus gain in relation to such agreement.

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15 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

To the extent that the transfer of loss and LAE reserves associated with loss events that occurred prior to the effective date of the transfer is between affiliated entities and neither entity records a gain or loss in surplus, the transaction qualifies as an exception in the NAIC SAP accounting guidance and is accounted for as prospective reinsurance.

***Insurance Related Acquisition Costs***

Commissions, premium taxes, and certain underwriting costs are expensed as incurred and are included in *Other underwriting expenses*. The Company records an unearned ceding commission accrual equal to the excess of the ceding commissions received from reinsurers compared to the anticipated acquisition cost of the business ceded. This amount is amortized as an increase to income over the effective period of the reinsurance agreement in proportion to the amount of insurance coverage provided.

***Provisions for Allowances and Unauthorized or Overdue Reinsurance***

The recoverability of certain assets, including insurance receivables with counterparties, is reviewed periodically by management. A minimum reserve, as required under the NAIC Annual Statement Instructions for Property and Casualty Companies for Schedule F–Provision for Overdue Reinsurance for uncollectible reinsurance, is recorded with an additional reserve required if an entity's experience indicates that a higher amount should be provided. The minimum reserve is recorded as a liability and the change between years is recorded as a gain or loss directly to *Unassigned surplus in the Statement of Liabilities, Capital and Surplus.* Any reserve over the minimum amount is recorded on the statement of operations by reversing the accounts previously utilized to establish the reinsurance recoverable. Various factors are taken into consideration when assessing the recoverability of these asset balances including: the age of the related amounts due and the nature of the unpaid balance, disputed balances, historical recovery rates and any significant decline in the credit standing of the counterparty. The Company has prepared Schedule F applying

State of Pennsylvania substantive reinsurance authorization rules and State of New York form of collateral rules, with concurrence from the PA

DOI.

PA SAP is applied in the determination of the Company's *Provision for reinsurance* with concurrence from the NY DFS.

***Reserves for Losses and Loss Adjustment Expenses***

Reserves for case IBNR and LAE losses are determined on the basis of actuarial specialists' evaluations and other estimates, including historical loss experience. The methods of making such estimates and for establishing the resulting reserves are reviewed and updated based on available information, and any resulting adjustments are recorded in the current period. Accordingly, newly established reserves for losses and LAE, or subsequent changes, are charged to income as incurred. In the event of loss recoveries through reinsurance agreements, loss and LAE reserves are reported net of reinsurance amounts recoverable for unpaid losses and LAE. Losses and LAE ceded through reinsurance are netted against losses and LAE incurred. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsurance policy based upon the terms of the underlying contract. See Note 5 for further discussion of policies and methodologies for estimating the liabilities and losses.

Workers' compensation reserves are discounted in accordance with NY DFS statutes; see Note 5 for further details.

Salvage and subrogation recoverables are estimated using past experience adjusted for current trends, and any other factors that would modify past experience. Estimated salvage and subrogation recoveries (net of associated expenses) are deducted from the liability for unpaid claims or losses.

***Structured Settlements***

In the ordinary course of business, the Company enters into structured settlements to settle certain claims. Structured settlements involve the purchase of an annuity to fund future claim obligations. In the event the life insurers providing the annuity, on certain structured settlements, are not able to meet their obligations, the Company would be liable for the payments of benefits. As of December 31, 2025, the Company has not incurred a loss and there has been no default by any of the life insurers included in the transactions. Management believes that based on the financial strength of the life insurers involved in these structured settlements (mostly affiliates) the likelihood of a loss is remote.

The estimated loss reserves eliminated by such structured settlement annuities and the unrecorded loss contingencies as of December 31, 2025 and 2024 were $1,035 and $1,060, respectively.

As of December 31, 2025, the Company had annuities with aggregate statement values in excess of one percent of its policyholders' surplus with life insurer affiliates as follows:

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16 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | | |
|:---|:---|:---|:---|
| **Life Insurance Company** | **State of Domicile** | **Licensed in<br>New York** | **Statement Value** |
| American General Life Insurance Company | Texas | No | $115 |
| American General Life Insurance Company of Delaware | Delaware | No | 199 |
| The United State Life Insurance Company in the City of New York | New York | Yes | 678 |

---

***Fair Value of Financial Instruments***

The degree of judgment used in measuring the fair value of financial instruments generally inversely correlates with the level of observable valuation inputs. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Conversely, financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction, liquidity and general market conditions.

Assets and liabilities recorded at fair value are measured and classified in accordance with a fair value hierarchy consisting of three 'levels' based upon the observability of inputs available in the marketplace as discussed below:

• Level 1: Fair value measurements that are based upon quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. The quoted price for such instruments is not subject to adjustment.

• Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

• Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions as to the inputs a hypothetical market participant would use to value that asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company's policy is to recognize transfers in and out at the end of the reporting period, consistent with the date of the determination of fair value (See Note 4 for the balance and activity of financial instruments). The valuation methods and assumptions used in estimating the fair values of financial instruments are as follows:

• The fair values of bonds, mortgage loans, unaffiliated common stocks and preferred stocks are based on fair values that reflect the price at which a security would sell in an arm's length transaction between a willing buyer and seller. As such, sources of valuation include third party pricing sources, stock exchanges, brokers or custodians or the NAIC Capital Markets and Investment Analysis Office ("NAIC IAO").

• The fair value of derivatives is determined using quoted prices in active markets and other market evidence whenever possible, including market-based updates, broker or dealer quotations or alternative pricing sources.

• The carrying value of all other financial instruments approximates fair value due to the short term nature.

***Cash Equivalents and Short-Term Investments***

Cash equivalents are short-term, highly liquid investments, with original maturities of three months or less, that are both; (a) readily convertible to known amounts of cash; and (b) so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Highly liquid debt securities with maturities of greater than three months but less than twelve months from the date of purchase are classified as short-term investments. Short-term investments are carried at amortized cost which approximates fair value.

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17 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***Bonds and Asset Backed and Structured Securities (excluding non-rated residual tranches or interests)***

Bonds include any securities representing a creditor relationship, whereby there is a fixed schedule for one or more future payments such as US government agency securities, municipal securities, corporate and convertible bonds, and fixed income instruments.Asset-Backed securities ("ABS") include residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS"), collateralized loan obligations ("CLO"), asset-backed securities, and other collateralized securities.

Bonds and ABS with an NAIC designation (as obtained from the NAIC Investment Analysis Office ("IAO")) of "1" or "2" (considered to be investment grade) are carried at amortized cost. Bonds and ABS with an NAIC designation of "3", "4", "5", "5GI", "6" or "6\*" (considered to be non-investment grade) are carried at the lower of amortized cost or fair value. Asset-Backed Securities fair values are primarily determined using independent pricing services and broker quotes. Bonds and ABS that have not been filed with the NAIC IAO, and have not received a designation in over a year are assigned a 5GI or 6\* designation depending on if the obligor is current on contracted principal and interest. Bond and ABS securities that have been filed and received a 6\* designation can carry a value greater than zero. Bond and ABS securities are assigned a 5GI designation when the following conditions are met: a) the documentation required for a full credit analysis did not exist, b) the issuer/obligor has made all contractual interest and principal payments, and c) an expectation of repayment of interest and principal exists. Amortization of premium or discount on bonds and ABS is calculated using the effective yield method.

Additionally, mortgage-backed securities ("MBS") and ABS prepayment assumptions were obtained from an outside vendor or internal estimates. The retrospective adjustment method is used to account for the effect of unscheduled payments affecting high credit quality securities, while securities with less than high credit quality and securities for which the collection of all contractual cash flows is not probable are both accounted for using the prospective adjustment method.

***Non-rated residual tranches or interests***

Non-rated residual tranches or interests are carried at the lower of cost or fair value. Changes in carrying value are record as *Unrealized gains or (losses)* in the *Statement of Changes in Capital and Surplus.*

***Mortgage Loans***

Mortgage loans on real estate are carried at unpaid principal balances, net of unamortized premiums, discounts and impairments. Pre-payments of principal are recorded as a reduction in the mortgage loan balance. If a mortgage loan provides for a prepayment penalty or acceleration fee in the event the loan is liquidated prior to its scheduled termination date, such fees are reported as investment income when received. Interest income includes interest collected, the change in interest income due and accrued, the change in unearned interest income, and the amortization of premiums, discounts, and deferred fees.

Impaired loans are identified by management as loans in which it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. The Company accrues income on impaired loans to the extent it is deemed collectible and the loan continues to perform under its original or restructured contractual terms. Non-performing loan interest income that is delinquent more than 90 days is generally recognized on a cash basis.

Mortgage loans are considered impaired when collection of all amounts due under contractual terms is not probable. Impairment is measured using either i) the present value of expected future cash flows discounted at the loan's effective interest rate, ii) the loan's observable market price, if available, or iii) the fair value of the collateral if the loan is collateral dependent. An allowance is typically established for the difference between the impaired value of the loan and its current carrying amount. Additional allowance amounts are established for incurred but not specifically identified impairments, based on statistical models primarily driven by past due status, debt service coverage, loan-to-value ratio, property occupancy, profile of the borrower and of the major property tenants, and economic trends in the market where the property is located. When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off against the allowance.

***Preferred Stocks***

Perpetual preferred stocks with an NAIC rating of "P1" or "P2", having characteristics of equity securities are carried at fair value. Redeemable preferred stocks with an NAIC rating of "RP1" or "RP2", which have characteristics of debt securities, are carried at book value. All preferred stocks with an NAIC rating of "3" through "6" are carried at the lower of book or fair value.

***Unaffiliated Common Stock Securities*** 

<u><br></u>

Unaffiliated common stock investments are carried at fair value with changes in fair value recorded as *Unrealized gains or (losses)* in *Unassigned funds (surplus)*, or as realized losses in the event a decline in value is determined to be other than temporary. For Federal Home Loan Bank ("FHLB") capital stock, which is only redeemable at par, the fair value shall be presumed to be par, unless considered other-than-temporarily impaired.

Common and preferred stock investments whose fair value is less than their carrying value or is at a significant discount to acquisition value are considered to be potentially impaired. For securities with unrealized losses, an analysis is performed. Factors include:

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18 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If management intends to sell a security that is in an unrealized loss position then an OTTI loss is considered to have occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If the investments are trading at a significant (25 percent or more) discount to par, amortized cost (if lower) or cost for an extended period of time based on facts and circumstances of the investment; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If a discrete credit event occurs resulting in: (i) the issuer defaulting on a material outstanding obligation; (ii) the issuer seeking protection from creditors under bankruptcy law or any similar laws intended for court supervised reorganization of insolvent enterprises; or, (iii) the issuer proposing a voluntary reorganization pursuant to which creditors are asked to exchange their claims for cash or securities having a fair value substantially lower than par value of their claims; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If there are other factors precluding a full recovery of the investment.

***Investments in subsidiaries and affiliated companies***

Investments in non-publicly traded affiliates are recorded based on the underlying equity of the respective entity's financial statements as presented on a basis consistent with the nature of the affiliates' operations (including any nonadmitted amounts). The Company's share of undistributed earnings and losses of affiliates is recorded as unrealized gains (losses) in *Unassigned surplus.*

***Investments in joint ventures, partnerships and limited liability companies***

Other invested assets include joint ventures and partnerships and are accounted for under the equity method, based on the most recent financial statements of the entity. Changes in carrying value are recorded as unrealized gains (losses). Additionally, other invested assets include investments in collateralized loans that are recorded at the lower of amortized cost and the fair value of the underlying collateral. Changes in carrying value resulting from adjustments where the fair value is less than amortized cost are recorded as unrealized gains (losses) in *Unassigned surplus*, while changes resulting from amortization are recorded as *Net investment income.*

***Derivatives***

<u><br></u>

Derivative financial instruments are accounted for at fair value using quoted prices in active markets and other market evidence whenever possible, including market-based inputs to valuation models, broker or dealer quotations or alternative pricing sources, reduced by the amount of collateral held or posted by the Company with respect to the derivative position. Changes in carrying value are recorded as unrealized gains (losses) in *Unassigned surplus*.

***Net investment income and gain/loss***

Investment income is recorded as earned and includes interest, dividends and earnings from subsidiaries, loans and joint ventures. Realized gains or losses on the disposition or impairment of investments are determined on the basis of specific identification.

Investment income due and accrued is assessed for collectability. The Company records a valuation allowance on investment income receivable when it is probable that an amount is uncollectible by recording a charge against investment income in the period such determination is made. Any amounts receivable over 90 days past due, or 180 days past due for mortgage loans, that do not have a valuation allowance are nonadmitted by the Company.

***Evaluating Investments for Other-Than-Temporary Impairment***

If a bond is determined to have an OTTI in value the cost basis is written down to fair value as its new cost basis, with the corresponding charge to *Net realized capital gains (losses)* as a realized loss.

***For bonds***, other than asset-backed and structured securities, an OTTI shall be considered to have occurred if it is probable that the Company will not be able to collect all amounts due under the original contractual terms.

***For asset-backed and structured securities***, an OTTI shall be considered to have occurred if the fair value of a security is below its amortized cost and management intends to sell or does not have the ability and intent to retain the security until recovery of the amortized cost (i.e., intent based impairment) and recognized as realized capital gains. When assessing the intent to sell a security, management evaluates relevant facts and circumstances including, but not limited to, decisions to rebalance the investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

In general, a security is considered for OTTI if it meets any of the following criteria:

• The Company may not realize a full recovery on their investment based on lack of ability or intent to hold a security to recovery;

• Fundamental credit risk of the issuer exists; or

• Other qualitative/quantitative factors exist indicating an OTTI has occurred.

When a credit-related OTTI is present, the amount of OTTI recognized as a realized capital loss is equal to the difference between the investment's amortized cost basis and the present value of cash flows expected to be collected regardless of management's ability or intent to hold the security.

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19 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***Common and preferred stock investments*** whose fair value is less than their carrying value or is at a significant discount to acquisition value are considered to be potentially impaired. For securities with unrealized losses, an analysis is performed. Factors include:

• If management intends to sell a security that is in an unrealized loss position then an OTTI loss is considered to have occurred;

• If the investments are trading at a significant (25 percent or more) discount to par, amortized cost (if lower) or cost for an extended period of time based on facts and circumstances of the investment; or

• If a discrete credit event occurs resulting in: (i) the issuer defaulting on a material outstanding obligation; (ii) the issuer seeking protection from creditors under bankruptcy law or any similar laws intended for court supervised reorganization of insolvent enterprises; or, (iii) the issuer proposing a voluntary reorganization pursuant to which creditors are asked to exchange their claims for cash or securities having a fair value substantially lower than par value of their claims; or

• If there are other factors precluding a full recovery of the investment.

***Limited partnership investments*** whose fair value is less than its book value with a significant unrealized loss are considered for OTTI. OTTI factors that are periodically considered include:

• If an order of liquidation or other fundamental credit issues with the partnership exists;

• If there is a significant reduction in scheduled cash flow activities between the Company and the partnership or fund during the year;

• If there is an intent to sell, or the Company may be required to sell, the investment prior to the recovery of cost of the investment; or

• If other qualitative/quantitative factors indicating an OTTI exist based on facts and circumstances of the investment.

***Foreign Currency Translation***

Foreign currency denominated assets and liabilities are translated into U.S. dollars using rates of exchange prevailing at the period end date. Revenues, expenses, gains, losses and surplus adjustments, of non-U.S. operations are translated into U.S. dollars based on weighted average exchange rate for the period. All gains or losses due to translation adjustments are recorded as unrealized gains (losses) within *Unassigned surplus* in the *Statements of Liabilities, Capital and Surplus*. All realized gains and losses due to exchange differences between settlement date and transaction date resulting from foreign currency transactions, not in support of foreign insurance operations, are included in *Net realized capital gains (losses)* in the *Statements of Operations and Changes in Capital and Surplus.*

***Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans***

The Company's employees participate in various AIG-sponsored defined benefit pension and postretirement plans. AIG, as sponsor, is ultimately responsible for the maintenance of these plans in compliance with applicable laws. The Company is not directly liable for obligations under these plans. AIG charges the Company and its insurance company affiliates pursuant to intercompany expense sharing agreements; the expenses are then shared by the pool participants in accordance with the pooling agreement.

The Company incurred employee related costs related to defined benefit and defined contribution plans during 2025, 2024 and 2023 of $5, $5 and $11, respectively.

***Income Taxes***

The Company files a consolidated U.S. federal income tax return with AIG. AIG has more than 100 subsidiaries which form part of this tax return. A complete listing of the participating subsidiaries is included in Note 8.

The Company is allocated U.S. federal income taxes based upon an amended and restated tax sharing agreement (the "Tax Sharing Agreement") with AIG, effective January 1, 2023, and approved by the Company's Board of Directors. This agreement provides that the Company shall incur tax results that would have been paid or received by such company if it had filed a separate federal income tax return, with limited exceptions.

Additionally, while the agreement described above governs the current and deferred income tax recorded in the income tax provision, the amount of cash that will be paid or received for U.S. federal income taxes may at times be different. The terms of this agreement are based on principles consistent with the allocation of income tax expense or benefit on a separate company basis, except that:

• The sections of the Internal Revenue Code relating to the Base Erosion Anti-abuse Tax ("BEAT") are applied, but only if the AIG consolidated group is subject to BEAT in the Consolidated Tax Liability,

• The impact of Deferred Intercompany Transactions (as defined in Treas. Reg. §1.1502-13(b)(1), if the "intercompany items" from such transaction, as defined in Treas. Reg. §1.1502-13(b)(2), have not been taken into account pursuant to the "matching rule" of Treas. Reg. §1.1502-13(c)), are excluded from current taxation, provided however, that the Company records the appropriate deferred tax asset and/or deferred tax liability related to the gain or loss and includes such gain or loss in its separate return tax liability in the subsequent tax year when the deferred tax liability or deferred tax asset becomes current; and

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20 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

• Regarding the Corporate Alternative Minimum Tax ("CAMT"), the Company is considered an applicable reporting entity with tax allocation agreement exclusions. Therefore, the Company is not required to calculate or recognize CAMT in its current or deferred tax computations, and the Company (i) is excluded from charges for any portion of AIG's CAMT, (ii) is not allocated any portion of AIG's CAMT credit carryover (if any), and (iii) reasonably expects that AIG (and/or other members of the consolidated tax group) is meeting any CAMT obligations.

The Company has an enforceable right to recoup federal income taxes in the event of future net losses that it may incur or to recoup its net losses carried forward as an offset to future net income subject to federal income taxes.

Under the Tax Sharing Agreement, income tax liabilities related to uncertain tax positions and tax authority audit adjustments ("TAAAs") shall remain with the Company for which the income tax liabilities relate. Furthermore, if and when such income tax liabilities are realized or determined to no longer be necessary, the responsibility for any additional income tax liabilities, benefits or rights to any refunds due, remains with the Company.

In accordance with Circular Letter 1979-33 issued by the NY DFS, AIG shall establish and maintain an escrow account for amounts where the Company's separate return liability exceeds the AIG consolidated tax liability. As of December 31, 2025, the Company's separate return liability did not exceed the AIG consolidated tax liability and therefore no amounts were maintained in escrow.

***Deferred Taxes***

The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance, if necessary, to reduce the deferred tax asset to an amount that is more likely than not to be realized ("adjusted gross deferred tax asset"). The evaluation of the recoverability of the deferred tax asset and the need for a valuation allowance requires management to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it would be to support a conclusion that a valuation allowance is not needed.

The Company's framework for assessing the recoverability of deferred tax assets requires it to consider all available evidence, including:

• the nature, frequency, and amount of cumulative financial reporting income and losses in recent years;

• the sustainability of recent operating profitability of our subsidiaries;

• the predictability of future operating profitability of the character necessary to realize the net deferred tax asset;

• the carryforward periods for the net operating loss, capital loss and foreign tax credit carryforwards, including the effect of reversing taxable temporary differences; and

• prudent and feasible actions and tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax asset.

The adjusted gross deferred tax asset is then assessed for statutory admissibility. The reversing amount eligible for loss carryback or the amount expected to be realized in three years is admissible, subject to the defined surplus limitation. The remaining adjusted gross deferred tax asset can be admitted to the extent of offsetting deferred tax liabilities.

**2. Accounting Adjustments to Statutory Basis Financial Statements**

<u><br></u>

***A.Change in Accounting Principles***

In 2025 , 2024 and 2023, there were no significant changes or modifications in the Statements of Statutory Accounting Principles ("SSAP").

In August, 2023 (with revisions in September 2024), the National Association of Insurance Commissioners (NAIC) Statutory Accounting

Principles Working Group (SAPWG) adopted the provisions of the Principles-Based Bond Definition (PBBD) Project, which is a principles based

methodology to classify bonds based upon the substance of the agreement. A bond is defined as "any security representing a creditor

relationship, whereby there is a fixed schedule for one or more future payments, and which qualifies as either an issuer credit obligation or an

asset-back security. Previously, the bond classification was based upon legal form.

Issuer credit obligations ("ICO") are bonds, for which the primary source of repayment is the general credit worthiness of an operating entity or

entities. An asset-backed security ("ABS") is a bond issued by an entity (an 'ABS Issuer') created for the primary purpose of raising debt

capital backed by financial assets or cash generating non-financial assets owned by the ABS Issuer, for which the primary source of repayment

is derived from the cash flows associated with the underlying defined collateral rather than the cash flows of an operating entity.

Securities that no longer meet the definition of an ICO or ABS, will be reported as other invested asset. ICO's and ABS's are accounted under

SSAP No. 26 Bonds and SSAP No. 43, Asset-Backed Securities, respectively. The accounting for other assets will be based upon the

characteristics of the investment.

The adoption of the change in accounting principle is effective January 1, 2025; however, specific transition guidance was provided to account

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21 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

for the change prospectively. Reclassification of a bond into a new classification based upon the revised guidance will not result in any gain or

loss and comparative disclosures are not required to be restated. The adoption of the provisions of the PBBD had $0 impact on the company.

<u><br></u>

***B.Adjustments to Surplus***

<u><br></u>

During 2025, 2024 and 2023 the Company identified corrections that resulted in after-tax statutory adjustments to beginning capital and surplus of $(20), $(14) and $25, respectively. In accordance with SSAP No. 3, *Accounting Changes and Corrections of Errors* ("SSAP 3"), the corrections of errors have been reported in the 2025, 2024 and 2023 statutory basis financial statements as adjustments to *Unassigned surplus*. The impact of the 2025 corrections had no impact on the 2024 and 2023 pre-tax income. Management has concluded that the effects of these errors on the previously issued financial statements were immaterial based on a quantitative and qualitative analysis. The impact to surplus, assets and liabilities as of January 1, 2025, 2024 and 2023 is presented in the following tables:

---

| | | | |
|:---|:---|:---|:---|
| ***2025 Adjustments*** | **Policyholders' Surplus** | **Total Admitted Assets** | **Total Liabilities** |
| **Balance At December 31, 2024** | $**5405** | $**19059** | $**13654** |
| **Adjustments to beginning Capital and Surplus:** |  |  |  |
| &nbsp;&nbsp;&nbsp;**Income tax corrections** | **(20)** | **(20)** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total adjustments to beginning Capital and Surplus** | **(20)** | **(20)** | **—** |
| **Balance at January 1, 2025 as adjusted** | $**5385** | $**19039** | $**13654** |

---

An explanation for each of the adjustments for prior period corrections is described below:

***Income tax corrections -*** The decrease in admitted assets includes the tax impact of the asset correction and a correction to foreign tax credits claimed in the Company's previously filed tax returns.

---

| | | | |
|:---|:---|:---|:---|
| ***2024 Adjustments*** | **Policyholders' Surplus** | **Total Admitted Assets** | **Total Liabilities** |
| **Balance At December 31, 2023** | $**7111** | $**20945** | $**13834** |
| Adjustments to beginning Capital and Surplus: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Asset corrections | (24) | (24) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax corrections | 10 | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total adjustments to beginning Capital and Surplus | (14) | (14) |  |
| **Balance at January 1, 2024 as adjusted** | $**7097** | $**20931** | $**13834** |

---

An explanation for each of the adjustments for prior period corrections is described below:

***Asset corrections*** - The decrease is due to non-admitting the unaudited assets of a certain SSAP 97 OIA investment. Additionally, further decline is driven by the result of foreign withholding tax on reinsurance activity not being appropriately pooled.

***Income tax corrections -*** The increase in the tax assets is primarily the result of the tax effect of the corresponding change in asset corrections, as well as deferred tax validation adjustments related to investments.

---

| | | | |
|:---|:---|:---|:---|
| ***2023 Adjustments*** | **Policyholders' Surplus** | **Total Admitted Assets** | **Total Liabilities** |
| **Balance At December 31, 2022** | $**7858** | $**21990** | $**14132** |
| Adjustments to beginning Capital and Surplus: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Liability corrections | 29 |  | (29) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax corrections | (4) | (3) | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total adjustments to beginning Capital and Surplus | 25 | (3) | (28) |
| **Balance at January 1, 2023 as adjusted** | $**7883** | $**21987** | $**14104** |

---

An explanation for each of the adjustments for prior period corrections is described below:

***Liability Corrections -*** The decrease in total liabilities is primarily due to (a) an overstatement of assumed Loss reserves and (b) an overstatement of Unearned premium reserve.

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22 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***Income tax corrections*** – The decrease in the tax assets and liabilities is primarily the result of (a) corrections to prior period balances for adjustments to the current and deferred tax assets and liabilities and (b) the tax effect of the corresponding change in asset realization and liability corrections.

**3. Investments** 

<u><br></u>

***A.Bond Investments***

<u><br></u>

The reconciliations from carrying value to fair value of the Company's bond investments as of December 31, 2025 and 2024 are outlined in the tables below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Carrying** <br>**Value** | **Gross** <br>**Unrealized**<br>**Gains** | **Gross** <br>**Unrealized**<br>**Losses** | **Fair** <br>**Value** |
| **Issuer Credit Obligations:** | **—** | | | |
| &nbsp;&nbsp;&nbsp;**U.S. Government Obligations** | $**360** | $**3** | $**(26)** | $**337** |
| &nbsp;&nbsp;&nbsp;**Other U.S. Government Obligations** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;**Non-U.S. Sovereign Jurisdiction** | **211** | **12** | **—** | **223** |
| &nbsp;&nbsp;&nbsp;**Municipal Bonds – General Obligation** | **292** | **9** | **(7)** | **294** |
| &nbsp;&nbsp;&nbsp;**Municipal Bonds – Special Revenue** | **674** | **10** | **(20)** | **665** |
| &nbsp;&nbsp;&nbsp;**Project Finance Bonds Issued by Operating Entities** | **64** | **—** | **(1)** | **63** |
| &nbsp;&nbsp;&nbsp;**Corporate Bonds** | **5178** | **95** | **(155)** | **5117** |
| &nbsp;&nbsp;&nbsp;**Mandatory Convertible Bonds** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;**Single Entity Backed Obligations** | **111** | **2** | **(7)** | **106** |
| &nbsp;&nbsp;&nbsp;**Bonds Issued by Funds Representing Operating Entities** | **617** | **20** | **(9)** | **627** |
| &nbsp;&nbsp;&nbsp;**Mortgage Loans that Qualify as SVO-Identified Credit Tenant Loans** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;**Other Issuer Credit Obligations** | **23** | **—** | **—** | **23** |
| &nbsp;&nbsp;&nbsp;**Bank Loans** | **204** | **1** | **—** | **205** |
| **Total Issuer Credit Obligations** | $**7734** | $**152** | $**(225)** | $**7660** |
| **Asset Backed Securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**Agency Residential Mortgage-Backed Securities – Fully Guaranteed (Exempt from RBC)** | $**20** | $**—** | $**(1)** | $**20** |
| &nbsp;&nbsp;&nbsp;**Agency Commercial Mortgage-Backed Securities – Fully Guaranteed (Exempt from RBC)** | **83** | **2** | **—** | **84** |
| &nbsp;&nbsp;&nbsp;**Agency Residential Mortgage-Backed Securities – Not/Partially Guaranteed (Not Exempt from RBC)** | **2065** | **24** | **(94)** | **1995** |
| &nbsp;&nbsp;&nbsp;**Agency Commercial Mortgage-Backed Securities – Not/Partially Guaranteed (Not Exempt from RBC)** | **54** | **1** | **—** | **55** |
| &nbsp;&nbsp;&nbsp;**Non-Agency Residential Mortgage-Backed Securities** | **1175** | **157** | **(9)** | **1324** |
| &nbsp;&nbsp;&nbsp;**Non-Agency Commercial Mortgage-Backed Securities** | **1286** | **17** | **(9)** | **1294** |
| &nbsp;&nbsp;&nbsp;**Non-Agency – CLOs/CBOs/CDOs** | **399** | **3** | **—** | **402** |
| &nbsp;&nbsp;&nbsp;**Lease-Backed Securities – Practical Expedient** | **144** | **2** | **(1)** | **144** |
| &nbsp;&nbsp;&nbsp;**Other Financial Asset-Backed Securities** | **672** | **8** | **(4)** | **675** |
| &nbsp;&nbsp;&nbsp;**Other Financial Asset-Backed Securities – Not Self-Liquidating** | **36** | **—** | **—** | **36** |
| &nbsp;&nbsp;&nbsp;**Other Non-Financial Asset-Backed Securities** | **223** | **2** | **(4)** | **221** |
| **Total Asset Backed Securities** | $**6157** | $**216** | $**(122)** | $**6250** |
| **Total Bonds Available for Sale** | $**13891** | $**368** | $**(347)** | $**13910** |

---

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23 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Carrying<br>Value** | **Gross<br>Unrealized<br>Gains** | **Gross<br>Unrealized<br>Losses** | **Fair<br>Value** |
| U.S. governments | $571 | $1 | $(34) | $538 |
| All other governments | 291 | 11 | (7) | 295 |
| States, territories and possessions | 189 | 4 | (9) | 184 |
| Political subdivisions of states, territories and possessions | 128 | 1 | (5) | 124 |
| &nbsp;&nbsp;Special revenue and special assessment obligations and all<br>non-guaranteed obligations of agencies and authorities<br>and their political subdivisions | 2469 | 2 | (190) | 2281 |
| Industrial and miscellaneous | 9259 | 204 | (420) | 9043 |
| **Total** | $**12907** | $**223** | $**(665)** | $**12465** |

---

The carrying values and fair values of bonds at December 31, 2025, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
| **December 31, 2025** | **Carrying<br>Value** | **Fair<br>Value** |
| **Due in one year or less** | $**205** | $**205** |
| **Due after one year through five years** | **2765** | **2807** |
| **Due after five years through ten years** | **3185** | **3166** |
| **Due after ten years** | **1579** | **1482** |
| **Structured securities** | **6157** | **6250** |
| **Total** | $**13891** | $**13910** |

---

***B.Mortgage Loan Investments***

<u><br></u>

The minimum and maximum lending rates for mortgage loans during 2025 were:

---

| | | |
|:---|:---|:---|
| **Category** | **Minimum<br>Lending Rate %** | **Maximum<br>Lending Rate %** |
| **Office** | **5.8%** | **18.0%** |

---

The maximum percentage of any one loan to the value of security at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages was 84 percent. The Company's mortgage loan portfolio is current as to payments of principal and interest, for both periods presented. There were no significant amounts of nonperforming mortgages (defined as those loans where payment of contractual principal or interest is more than 90 days past due) during any of the periods presented. The Company did not have any advanced amounts for taxes or assessments.

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

24 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

The following table details an analysis of mortgage loans as of December 31, 2025 and 2024:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | | **Residential** | **Residential** | **Commercial** | **Commercial** | **Commercial** | |
| |<br>**Farm** | **Insured** | **All Other** | **Insured** | **All Other** | **Mezzanine** |<br>**Total** |
| **2025** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;**Recorded Investment** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;**Current** | $**—** | $**—** | $**—** | $**—** | $**663** | $**24** | $**687** |
| &nbsp;&nbsp;**30 - 59 days past due** | **—** | **—** | **—** | **—** | **4** | **—** | **4** |
| &nbsp;&nbsp;**60 - 89 days past due** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;**90 - 179 days past due** | **—** | **—** | **—** | **—** | **3** | **—** | **3** |
| &nbsp;&nbsp;**Greater than 180 days past due** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;**Total** | $**—** | $**—** | $**—** | $**—** | $**670** | $**24** | $**694** |
| 2024 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Recorded Investment |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current | $- | $- | $- | $- | $**859** | $**40** | $**898** |
| &nbsp;&nbsp;30 - 59 days past due | - | - | - | - | **-** | **-** | **-** |
| &nbsp;&nbsp;60 - 89 days past due | - | - | - | - | **-** | **-** | **-** |
| &nbsp;&nbsp;90 - 179 days past due | - | - | - | - | **39** | **-** | **39** |
| &nbsp;&nbsp;Greater than 180 days past due | - | - | - | - | **-** | **-** | **-** |
| &nbsp;&nbsp;Total | $- | $- | $- | $- | $**897** | $**40** | $**937** |

---

At December 31, 2025 and 2024, the Company held $74 and $141, respectively, in impaired mortgages with $44 and $59, respectively, of related allowances for credit losses. There were $21 and $21 in impaired mortgage loans without a related allowance at both periods ended December 31, 2025 and 2024.

***C.Asset-Backed and Structured Securities***

<u><br></u>

The Company did not record any non-credit OTTI losses during 2025, 2024 and 2023 for Asset Backed Securities.

As of December 31, 2025, 2024 and 2023, the Company held asset backed securities for which it recognized $0, $0 and $5, respectively, of credit-related OTTI based on the present value of projected cash flows being less than the amortized cost of the securities.

The following table shows the aggregate unrealized losses and related fair value relating to those securities for which an OTTI has not been recognized as of the reporting date and the length of time that the securities have been in a continuous unrealized loss position:

---

| | | |
|:---|:---|:---|
| **Years Ended December 31,** | **2025** | 2024 |
| Aggregate unrealized losses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less than 12 Months | $**(4)** | $(23) |
| &nbsp;&nbsp;&nbsp;&nbsp;12 Months or longer | **(119)** | (201) |
| Aggregate related fair value of securities with unrealized losses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less than 12 Months | $**479** | $1961 |
| &nbsp;&nbsp;&nbsp;&nbsp;12 Months or longer | **973** | 1326 |

---

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25 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***D. Unrealized losses***

<u><br></u>

The fair value of the Company's bonds and stocks that had gross unrealized losses (where fair value is less than amortized cost) as of December 31, 2025 and 2024 are set forth in the tables below:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Less than 12 Months** | **Less than 12 Months** | **12 Months or Longer** | **12 Months or Longer** | **Total** | **Total** |
| **Description of Securities** | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** |
| **Bonds available for sale:** | | | | | | |
| &nbsp;&nbsp;&nbsp;**Issuer Credit Obligations** | **448** | **(6)** | **1899** | **(221)** | **2347** | **(227)** |
| &nbsp;&nbsp;&nbsp;**Asset Backed Securities** | **479** | **(4)** | **973** | **(119)** | **1452** | **(123)** |
| **Total Bonds Available for Sale** | **927** | **(10)** | **2872** | **(340)** | **3799** | **(350)** |
| **Common Stock - Unaffliated** | **—** | **—** | **4** | **(3)** | **4** | **(3)** |
| **Total Common Stock - Unaffliated** | **—** | **—** | **4** | **(3)** | **4** | **(3)** |
| **Preferred Stocks** | **1** | **—** | **—** | **—** | **1** | **—** |
| **Total Preferred Stocks** | **1** | **—** | **—** | **—** | **1** | **—** |
| **Total bonds and stocks** | **928** | **(10)** | **2876** | **(343)** | **3804** | **(353)** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Less than 12 Months** | **Less than 12 Months** | **12 Months or Longer** | **12 Months or Longer** | **Total** | **Total** |
| **December 31, 2024**<br>**Description of Securities** | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** |
| U.S. governments | $370 | $(7) | $70 | $(27) | $440 | $(34) |
| All other governments | 217 | (6) | 25 | (6) | 242 | (12) |
| States, territories and possessions | 106 | (7) | 15 | (2) | 121 | (9) |
| Political subdivisions of states,<br>&nbsp;&nbsp;&nbsp;&nbsp; territories and possessions | 32 |  | 38 | (5) | 70 | (5) |
| Special revenue and special assessment<br>&nbsp;&nbsp;&nbsp;&nbsp; obligations and all non-guaranteed<br>&nbsp;&nbsp;&nbsp;&nbsp; obligations of agencies and authorities<br>&nbsp;&nbsp;&nbsp;&nbsp; and their political subdivisions | 1227 | (17) | 844 | (172) | 2071 | (189) |
| Industrial and miscellaneous | 2971 | (105) | 2501 | (390) | 5472 | (495) |
| **Total bonds** | $**4923** | $**(142)** | $**3493** | $**(602)** | $**8416** | $**(744)** |
| **Non-affiliated** | **1** | **(5)** | **4** | **(1)** | **5** | **(6)** |
| **Total common stocks** | $**1** | $**(5)** | $**4** | $**(1)** | $**5** | $**(6)** |
| **Preferred stocks** | **—** | **—** | **—** | **—** | **—** | **—** |
| **Total Preferred stocks** | $**—** | $**—** | $**—** | $**—** | $**—** | $**—** |
| **Total bonds and stocks** | $**4924** | $**(147)** | $**3497** | $**(603)** | $**8421** | $**(750)** |

---

***E Realized Gains Losses***

<u><br></u>

Proceeds from sales and associated gross realized gains (losses) for the years ended December 31, 2025, 2024 and 2023 were as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Years ended December 31,** | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Bonds** | **Equity Securities** | **Bonds** | **Equity Securities** | **Bonds** | **Equity Securities** |
| Proceeds from sales | $**3611** | $**1** | $5347 | $12 | $3813 | $117 |
| Gross realized gains | **10** | **1** | 24 | 4 | 55 | 16 |
| Gross realized losses | **(110)** | **—** | (203) | (4) | (186) |  |

---

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26 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***F.&nbsp;&nbsp;&nbsp;&nbsp;Derivative Financial Instruments***

<u><br></u>

The Company holds currency derivatives and credit default swaps. Derivative products include currency swaps, currency forwards and default swaps. The Company's currency derivative were entered into to manage risk from currency exchange rate fluctuations, and the impact of such fluctuations to surplus and cash flows on investments or loss reserves. While not accounted for under hedge accounting, the currency derivatives are economic hedges of the Company's exposure to fluctuations in the value of receipts on certain investments held by the Company denominated in foreign currencies (primarily GBP and EUR), or of the Company's exposure to fluctuations in recorded amounts of loss reserves denominated in foreign currencies (primarily JPY). The Company's credit default swaps were entered into to manage credit risk exposure to reinsurance counterparties.

***Market Risk***

The Company is exposed under these types of contracts to fluctuations in value of the swaps and forwards and variability of cash flows due to changes in interest rates and exchange rates.

***Credit Risk***

The current credit exposure of the Company's derivative contracts is limited to the fair value of such contracts. Credit risk is managed by entering into transactions with creditworthy counterparties and obtaining collateral.

***Cash Requirements***

The Company is subject to collateral requirements on some of the Company's derivative contracts. Additionally, the Company is required to make currency exchanges on fixed dates and fixed amounts or fixed exchange rates, or make a payment in the amount of foreign currency physically received on certain foreign denominated investments. For credit default swaps, the Company is required to make premium payments on a fixed payment date.

The Company has determined that the currency derivatives do not qualify for hedge accounting under the criteria set forth in SSAP No. 86, *Accounting for Derivative Instruments and Hedging Transactions* ("SSAP 86"). As a result, the Company's currency rate contracts are accounted for at fair value and the changes in fair value are recorded as unrealized gains (losses) within the *Statements of Operations and Changes in Capital and Surplus* until the contract expires, paid down or is redeemed early. In the event a contract is fully redeemed before its expiration, the related unrealized amounts will be recognized in *Net realized capital gains (losses)*. Furthermore, if the contract has periodic payments or fully matures, any related unrealized amounts are recognized in *Net investment income earned*.

The Company did not apply hedge accounting to any of its derivatives for any period in these financial statements. The following tables summarize the outstanding notional amounts, the fair values and the realized and unrealized gains or losses of the derivative financial instruments held by the Company for the years ended December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **Years ended December 31, 2025** | **Years ended December 31, 2025** |
|<br>**Derivative Financial Instrument** | **Outstanding Notional Amount** | **Fair Value** | **Realized capital gains/ (losses)** | **Unrealized capital gains / (losses)** |
| **Swaps** | $**56** | $**2** | $**1** | $**(14)** |
| **Forwards** | **743** | **(17)** | **—** | **(27)** |
| **Total** | $**799** | $**(15)** | $**1** | $**(41)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **Years ended December 31, 2024** | **Years ended December 31, 2024** |
|<br>**Derivative Financial Instrument** | **Outstanding Notional Amount** | **Fair Value** | **Realized Capital gains/(losses)** | **Unrealized capital gains / losses** |
| Swaps | $150 | $15 | $1 | $5 |
| Forwards | 1051 | 10 | (32) | (2) |
| **Total** | $**1201** | $**25** | $**(31)** | $**3** |

---

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27 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***G.&nbsp;&nbsp;&nbsp;&nbsp;Other Invested Assets***

<u><br></u>

---

| | | |
|:---|:---|:---|
| The following table shows the components of the company's other invested assets. |  |  |
|  | **2025** | **2024** |
| Investments in joint ventures, partnerships and limited liability companies | **1373** | 1546 |
| Other Investments | **29** | 30 |
| Non-Admitted assets | **(49)** | (52) |
| Total other invested assets | **1353** | 1524 |

---

The Company holds certain alternative investments, including private equity funds and hedge funds, using NAV as a practical expedient. Such investments have individually varying investment strategies and a variety of redemption terms and conditions. The Company believes that using NAV as a practical expedient for these investments is a fair and close approximation of the investment's liquidation value. In Q4 2025, the Company entered into an agreement to exchange certain alternative investments for an interest in a fund investment with a third-party asset manager CVC Capital Partners plc (CVC) in 2026. As a result of this agreement, certain alternative investments are recorded by the Company at the exchange value in the agreement rather than NAV.

During 2025, 2024 and 2023, the Company recorded OTTI losses on investments in joint ventures and partnerships of $93, $16, and $14, respectively.

***H.&nbsp;&nbsp;&nbsp;&nbsp;Investment Income***

<u><br></u>

Investment income due and accrued over 90 days past due of $0 was non-admitted in December 31, 2025. Investment income due and accrued over 90 days past due of $0 was non-admitted in December 31, 2024. Investment expenses of $37, $39 and $45 were included in Net investment income earned for the years ended December 31, 2025, 2024 and 2023, respectively.

The gross, nonadmitted assets and admitted amounts for interest income due and accrued were as follows:

---

| | |
|:---|:---|
| **Interest Income Due and Accrued** | **Amount** |
| **Gross** | $**119** |
| **Nonadmitted** | **—** |
| **Admitted** | $**119** |

---

***I.&nbsp;&nbsp;&nbsp;&nbsp;Restricted Assets***

<u><br></u>

The Company had securities deposited with regulatory authorities, as required by law, with a carrying value of $2,607 and $1,904 as of December 31, 2025 and 2024, respectively.

**4.&nbsp;&nbsp;&nbsp;&nbsp;Fair Value of Financial Instruments**

<u><br></u>

The following tables present information about financial instruments carried at fair value on a recurring basis and indicate the level of the fair value measurement as of December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Bonds available for sale:** | | | | |
| &nbsp;&nbsp;&nbsp;**Issuer Credit Obligations** | $**—** | $**201** | $**3** | $**204** |
| &nbsp;&nbsp;&nbsp;**Asset Backed Securities** | **—** | **12** | **22** | **34** |
| **Common stocks** | **1** | **5** | **—** | **6** |
| **Preferred stock** | **—** | **1** | **—** | **1** |
| **Derivative assets** | **—** | **3** | **—** | **3** |
| **Derivative liabilities** | **—** | **(18)** | **—** | **(18)** |
| **Total** | $**1** | $**204** | $**25** | $**230** |

---

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28 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Bonds | $— | $594 | $136 | $730 |
| Common stocks | 1 | 4 | 112 | 117 |
| Preferred Stock |  |  | 1 | 1 |
| Derivative assets |  | 45 |  | 45 |
| Derivative liabilities |  | (20) |  | (20) |
| **Total** | $**1** | $**623** | $**249** | $**873** |

---

***A.Fair Value Measurements in Level 3 of the Fair Value Hierarchy***

<u><br></u>

The following tables show the balance and activity of financial instruments classified as level 3 in the fair value hierarchy for the years ended December 31, 2025 and 2024:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Beginning Balance at January 1, 2025** | **Transfers into Level 3** | **Transfers out of Level 3** | **Total Gains (Losses) included in Net Income** | **Total Gains (Losses) Included in Surplus** | **Purchases, Sales, Issuances, Settlements, Net** | **Balance at December 31, 2025** |
| **Bonds** | | | | | | | |
| &nbsp;&nbsp;&nbsp;**Issuer Credit Obligations** | $**63** | $**36** | $**(59)** | $**(8)** | $**1** | $**(30)** | $**3** |
| &nbsp;&nbsp;&nbsp;**Asset Backed Securities** | **73** | **27** | **(72)** | **1** | **5** | **(12)** | **22** |
| **Common stocks** | **112** | **3** | **(113)** | **1** | **—** | **(3)** | **—** |
| **Preferred stocks** | **1** | **1** | **(2)** | **—** | **—** | **—** | **—** |
| **Mutual funds** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| **Derivative - Credit default swap** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| **Total** | $**249** | $**67** | $**(246)** | $**(6)** | $**6** | $**(45)** | $**25** |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Beginning Balance at January 1, 2024** | **Transfers into Level 3** | **Transfers out of Level 3** | **Total Gains (Losses) included in Net Income** | **Total Gains (Losses) included in Surplus** | **Purchases, Sales, Issuances, Settlements, Net** | **Balance at December 31, 2024** |
| Bonds | $111 | $88 | $(37) | $(1) | $(4) | $(21) | $136 |
| Preferred Stocks | 19 | 3 | (19) | (4) | 2 |  | 1 |
| Common stocks | 109 | 4 | (6) | (2) | (1) | 8 | 112 |
| Mutual funds | 11 |  | (10) |  | (1) |  |  |
| Derivative - Credit default swap |  | (1) |  | (1) | 1 | 1 |  |
| **Total** | $**250** | $**94** | $**(72)** | $**(8)** | $**(3)** | $**(12)** | $**249** |

---

Assets are transferred out of Level 3 when circumstances change such that significant inputs can be corroborated with market observable data or when the asset is no longer carried at fair value. This may be due to a significant increase in market activity for the asset, a specific event, one or more significant inputs becoming observable or when a long-term interest rate significant to a valuation becomes short-term and this observable. Transfers out of Level 3 can also occur due to favorable credit migration resulting in a higher NAIC designation. Securities are generally transferred into Level 3 due to a decrease in market transparency, downward credit migration and an overall increase in price disparity for certain individual security types. The Company's policy is to recognize transfers in and out at the end of the reporting period, consistent with the date of the determination of fair value.

The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments, and includes only those instruments for which information about the inputs is reasonably available to us, such as data from independent third-party valuation service providers and from internal valuation models. Because input information from third-parties with respect to certain Level 3 instruments may not be reasonably available to the Company, balances shown below may not equal total amounts reported for such Level 3 assets.

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29 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Fair Value at December 31, 2025** | **Valuation Technique** | **Unobservable Input** | **Range (Weighted Average)** |
| **Assets:** | | | | |
| **Asset Backed Securities** | $**4** | **Discounted cash flow** | **Yield** | **7.23% - 7.23% (7.23%)** |

---

***B.&nbsp;&nbsp;&nbsp;&nbsp;Fair Value of all Financial Instruments***

<u><br></u>

The table below details the fair value of all financial instruments except for those accounted for under the equity method as of December 31, 2025 and 2024:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Aggregate Fair Value** | **Admitted Assets** | **Level 1** | **Level 2** | **Level 3** | **Not Practicable (Carry Value)** |
| **Bonds available for sale:** | | | | | | |
| &nbsp;&nbsp;&nbsp;**Issuer Credit Obligations** | $**7660** | $**7734** | $**—** | $**7599** | $**61** | $**—** |
| &nbsp;&nbsp;&nbsp;**Asset Backed Securities** | **6250** | **6157** | **—** | **5030** | **1221** | **—** |
| **Total Bonds Available for Sale** | $**13910** | $**13891** | $**—** | $**12629** | $**1282** | $**—** |
| **Cash and Cash equivalents** | **319** | **319** | **319** | **—** | **—** | **—** |
| **Common stocks** | **114** | **114** | **1** | **8** | **105** | **—** |
| **Preferred stocks** | **1** | **1** | **—** | **1** | **—** | **—** |
| **Mortgage loans** | **685** | **694** | **—** | **—** | **685** | **—** |
| **Derivative assets** | **3** | **3** | **—** | **3** | **—** | **—** |
| **Derivative liabilities** | **(18)** | **(18)** | **—** | **(18)** | **—** | **—** |
| **Total** | **15014** | **15004** | **320** | **12623** | **2072** | **—** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Aggregate Fair Value** | **Admitted Assets** | **Level 1** | **Level 2** | **Level 3** | **Not Practicable (Carry Value)** |
| Bonds | $12465 | $12907 | $— | $11292 | $1173 | $— |
| Cash equivalents and short term investments | 119 | 119 | 119 |  |  |  |
| Common stocks | 281 | 281 | 1 | 6 | 275 |  |
| Derivative assets | 45 | 45 |  | 45 |  |  |
| Derivative liabilities | (20) | (20) |  | (20) |  |  |
| Mortgage loans | 901 | 937 |  |  | 901 |  |
| Preferred Stocks | 1 | 1 |  |  | 1 |  |
| **Total** | $**13792** | $**14270** | $**120** | $**11323** | $**2350** | $**—** |

---

**5.&nbsp;&nbsp;&nbsp;&nbsp;Reserves for Losses and Loss Adjustment Expenses**

<u><br></u>

A roll forward of the Company's net reserves for losses and LAE as of December 31, 2025, 2024 and 2023, is set forth in the table below:

---

| | | | |
|:---|:---|:---|:---|
| **December 31,** | **2025** | **2024** | **2023** |
| **Reserves for losses and LAE, end of prior year** | $**8069** | $7919 | $8172 |
| Incurred losses and LAE related to: |  |  |  |
| &nbsp;&nbsp;&nbsp;Current accident year | **2822** | 2700 | 2726 |
| &nbsp;&nbsp;&nbsp;Prior accident year | **(129)** | (96) | (29) |
| &nbsp;&nbsp;**Total incurred losses and LAE** | $**2693** | $2604 | $2697 |
| Paid losses and LAE related to: |  |  |  |
| &nbsp;&nbsp;&nbsp;Current accident year | **(632)** | (624) | (868) |
| &nbsp;&nbsp;&nbsp;Prior accident year | **(1983)** | (1830) | (2082) |
| &nbsp;&nbsp;**Total paid losses and LAE** | $**(2615)** | $**(2454)** | $**(2950)** |
| **Reserves for losses and LAE, end of current year** | $**8147** | $**8069** | $**7919** |

---

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

30 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

During 2025, after applying the impact of the ADC, the Pool reported net favorable incurred loss and LAE of approximately $129. This favorable incurred includes $11 of favorable due to changes in discount. This results in a favorable prior year development ("PYD") of $118.

The favorable PYD was mostly driven by favorable development in Workers Compensation, Special Property, Commercial Multi-Peril and Other Liability Claims Made, partially offset by unfavorable development in Other Liability Occurrence and Commercial Auto Liability.

During 2024, after applying the impact of the ADC, the Company reported net favorable incurred loss and LAE of approximately $96. This favorable incurred includes $17 unfavorable due to changes in discount as a result of interest rate fluctuation. This results in a favorable prior year development ("PYD") of $113.

The favorable PYD was mostly driven by favorable development in Workers Compensation, Other Liability Claims Made and Special Property, partially offset by adverse development in Other Liability Occurrence.

During 2023, after applying the impact of the ADC, the Company reported net favorable incurred loss and LAE of approximately $29. This favorable incurred includes $8 favorable due to changes in discount as a result of interest rate fluctuation. This results in a favorable prior year development ("PYD") of $21.

The favorable PYD was mostly driven by favorable development in Workers Compensation and Personal Insurance, partially offset by adverse development in Other Liability Claims Made and Special Property.

The Company's reserves for losses and LAE have been reduced for anticipated salvage and subrogation of $193, $203 and $202 for the years ended December 31, 2025, 2024 and 2023, respectively. The Company paid $4, $7 and $8 in the reporting period to settle 68, 74 and 86 claims related to extra contractual obligations or bad faith claims stemming from lawsuits for the years ended December 31, 2025, 2024 and 2023, respectively.

**A.Asbestos/Environmental Reserves**

<u><br></u>

The Company has indemnity claims asserting injuries from toxic waste, hazardous substances, asbestos and other environmental pollutants and alleged damages to cover the clean-up costs of hazardous waste dump sites (environmental claims). Estimation of environmental claims loss reserves is a difficult process, as these claims, which emanate from policies written in 1986 and prior years, cannot be estimated by conventional reserving techniques. Environmental claims development is affected by factors such as inconsistent court resolutions, the broadening of the intent of policies and scope of coverage and increasing number of new claims. The Company and other industry members have and will continue to litigate the broadening judicial interpretation of policy coverage and the liability issues. If the courts continue in the future to expand the intent of the policies and the scope of the coverage, as they have in the past, additional liabilities would emerge for amounts in excess of reserves held. This emergence cannot now be reasonably estimated, but could have a material impact on the Company's future operating results or financial position.

The Company has exposure to asbestos and/or environmental losses and LAE costs arising from pre-1986 general liability, product liability, commercial multi-peril and excess liability insurance or reinsurance policies as noted below:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Asbestos Losses** | **Asbestos Losses** | **Asbestos Losses** | **Environmental Losses** | **Environmental Losses** | **Environmental Losses** |
|<br>**December 31,** | **2025** | **2024** | **2023** | **2025** | **2024** | **2023** |
| &nbsp;&nbsp;Direct |  |  |  |  |  |  |
| Loss and LAE reserves, beginning of year | $**505** | $522 | $537 | $**191** | $204 | $219 |
| Incurred losses and LAE | **48** | 54 | 29 | **(1)** |  |  |
| Calendar year paid losses and LAE | **(46)** | (71) | (44) | **(13)** | (13) | (15) |
| Loss and LAE Reserves, end of year | $**507** | $**505** | $**522** | $**177** | $**191** | $**204** |
| &nbsp;&nbsp;Assumed reinsurance |  |  |  |  |  |  |
| Loss and LAE reserves, beginning of year | $**218** | $234 | $244 | $**15** | $15 | $16 |
| Incurred losses and LAE | **2** | (8) | (4) | **—** |  |  |
| Calendar year paid losses and LAE | **(4)** | (8) | (6) | **—** |  | (1) |
| Loss and LAE Reserves, end of year | $**216** | $**218** | $**234** | $**15** | $**15** | $**15** |
| &nbsp;&nbsp;Net of reinsurance |  |  |  |  |  |  |
| Loss and LAE reserves, beginning of year | $**1** | $1 | $1 | $**—** | $— | $— |
| Incurred losses and LAE | **—** |  |  | **—** |  |  |
| Calendar year paid losses and LAE | **—** |  |  | **—** |  |  |
| Loss and LAE Reserves, end of year | $**1** | $**1** | $**1** | $**—** | $**—** | $**—** |

---

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

31 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

The Company estimates the full impact of the asbestos and environmental exposure by establishing case basis reserves on all known losses and establishes bulk reserves for IBNR losses and LAE based on management's judgment after reviewing all the available loss, exposure, and other information.

Included in the above table are loss and LAE - IBNR and bulk reserves arising from pre-1986 general liability, product liability, commercial multi-peril and excess liability insurance or reinsurance policies as noted below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Loss Reserves** | **Loss Reserves** | **LAE Reserves** | **LAE Reserves** |
| **Asbestos**<br>**December 31,** | **2025** | **2024** | **2025** | **2024** |
| Direct basis: | $**194** | $214 | $**35** | $32 |
| Assumed reinsurance basis: | **81** | 82 | **6** | 6 |
| Net of ceded reinsurance basis: | **—** |  | **—** |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Loss Reserves** | **Loss Reserves** | **LAE Reserves** | **LAE Reserves** |
| **Environmental**<br>**December 31,** | **2025** | **2024** | **2025** | **2024** |
| Direct basis: | $**74** | $75 | $**32** | $34 |
| Assumed reinsurance basis: | **3** | 8 | **2** | 4 |
| Net of ceded reinsurance basis: | **—** |  | **—** |  |

---

***B.&nbsp;&nbsp;&nbsp;&nbsp;Discounting of Liabilities for Unpaid Losses or Unpaid Loss Adjustment Expenses***

<u><br></u>

The Company discounts its workers' compensation (both tabular and non-tabular) reserves.

The Company's tabular discount is obtained from the Company's Lifetime Benefit Calculator (LBC), which is a tool used by the claims handlers to calculate case reserves. The LBC enables the Company to determine its tabular case reserve discount using a given interest rate curve. To be consistent with the non-tabular discount, we used a 4.5% interest rate for PA/DE domiciled companies (DE's maximum allowable rate), which is subject to regulator approval, and a 5% interest for NY domiciled companies (as prescribed by NY) when determining the tabular case reserve discount. Tabular discount only applied to case reserves, not IBNR reserves. The December 31, 2025 and 2024 liabilities include $537 and $579 of such discounted reserves, respectively.

***Tabular Reserve Discount***

The table below presents the amount of tabular discount applied to the Company's reserves as of December 31, 2025, 2024 and 2023.

---

| | | | |
|:---|:---|:---|:---|
| **Lines of Business** | **2025** | **2024** | **2023** |
| Workers' Compensation |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Case Reserves | $**47** | $36 | $98 |

---

As of December 31, 2025, 2024 and 2023, the tabular case reserve discount is presented net of the ceded discount related to the ADC of $52, $54, and $95, respectively.

***Non-Tabular Discount***

The Company's non-tabular workers' compensation case reserves are discounted using the Company's own payout pattern and a 5 percent interest rate, as prescribed by NY SAP.

The table below presents the amount of non-tabular discount applied to the Company's reserves as of December 31, 2025, 2024 and 2023.

---

| | | | |
|:---|:---|:---|:---|
| **Lines of Business** | **2025** | **2024** | **2023** |
| Workers' Compensation |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Case Reserves | $**208** | $203 | $152 |

---

As of December 31, 2025, 2024 and 2023, the non-tabular case reserve discount is presented net of the ceded discount related to the ADC of $122, $145, and $116,respectively.

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32 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

**6.&nbsp;&nbsp;&nbsp;&nbsp;Related Party Transactions**

<u><br></u>

***A.Combined Pooling Agreement***

<u><br></u>

As described in Note 1, effective January 1, 2025, the Combined pooling Agreement was amended and restated, with Western World, Stratford and Tudor ("Western World Insurers") becoming zero percent participants in the Combined Pool. The Company's' participation in the pool remained the same. There were no changes to surplus as a result of the changes to the Combined Pooling Agreement. Significant portions of the balances below were previously ceded from the Western World Insurers to the Combined Pool via the now commuted quota share (refer to Note 6B).

National Union is the lead pool Company. See the table in Note 1A for the listing of all of the other participants of the Combined Pool, their NAIC

Company numbers and participation percentages in the Combined Pool.

The following table shows the changes in Assets, Liabilities and the Statement of Income for the Combined Pool as a result of the 2025 Repooling Transaction.

---

| | |
|:---|:---|
| **Assets:** | **Amount** |
| Agents' balances or uncollected premiums | $72 |
| Deferred premiums, agents' balances | 2 |
| Amounts recoverable from reinsurers | 75 |
| Other insurance assets | 1 |
| **Total Assets** | $**150** |
| **Liabilities:** |  |
| Reserve for losses and loss adjustment expenses | $240 |
| Unearned premium reserves (net) | 80 |
| Ceded reinsurance premiums payable | 100 |
| Provision for reinsurance | 2 |
| Other insurance liabilities | 32 |
| **Total Liabilities** | $**454** |
| **Statement of Operations and Changes in Surplus** |  |
| Net premiums written | $320 |
| Change in unearned premium reserves | $(80) |
| **Premiums earned** | $**240** |
| Losses and loss adjustment expenses incurred | $240 |
| **Net underwriting gain (loss)** | $**—** |
| **Net Impact Corresponding to Consideration Received / (Paid)** | $**304** |

---

***B. Significant Transactions***

<u><br></u>

The following table summarizes transactions (excluding reinsurance and cost allocation transactions) that occurred during 2025, 2024 and 2023 between the Company and affiliated companies in which the value exceeded one-half of one percent of the Company's admitted assets as of December 31, 2025, 2024 and 2023:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | | **2025** | **2025** | **2025** | **2025** |
| | | | **Assets Received by<br>the Company** | **Assets Received by<br>the Company** | **Assets Transferred by<br>the Company** | **Assets Transferred by<br>the Company** |
| **Date of Transaction** | **Explanation of Transaction** | **Name of Affiliate** | **Statement Value** | **Description** | **Statement Value** | **Description** |
| **Various** | **Tax Payment** | **AIG** | $**—** | **-** | $**237** | **Cash** |

---

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

33 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | | **2024** | **2024** | **2024** | **2024** |
| | | | **Assets Received by<br>the Company** | **Assets Received by<br>the Company** | **Assets Transferred by<br>the Company** | **Assets Transferred by<br>the Company** |
| **Date of Transaction** | **Explanation of Transaction** | **Name of Affiliate** | **Statement Value** | **Description** | **Statement Value** | **Description** |
| 6/20/2024 | Return of Capital | AIG PC US |  | - | 795 | Cash |
| 6/20/2024 | Common stock | AIG PC US |  | - | 5 | Cash |
| 12/5/2024 | Return of Capital | AIG PC US |  | - | 795 | Cash |
| 12/5/2024 | Common stock | AIG PC US |  | - | 5 | Cash |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | | **2023** | **2023** | **2023** | **2023** |
| | | | **Assets Received by<br>the Company** | **Assets Received by<br>the Company** | **Assets Transferred by<br>the Company** | **Assets Transferred by<br>the Company** |
| **Date of Transaction** | **Explanation of Transaction** | **Name of Affiliate** | **Statement Value** | **Description** | **Statement Value** | **Description** |
| 12/21/2023 | Return of Capital | AIG PC US |  | - | 946 | Cash |
| 12/21/2023 | Common Capital Stock | AIG PC US |  | - | 4 | Cash |

---

For a listing of Intercompany Dividends to parent, please see note 9A.

***Western-World Commutation***

Effective January 1, 2025, the Western World Insurers entered into a commutation agreement that transferred the business previously ceded by the Western World Insurers to NUFIC back to the Balance sheet of the Western World Insurers. Net unearned premium reserves of $250 and Net loss reserves of $667 were transferred in the transaction. Immediately after the commutation the Western World Insurers joined the Combined Pool.

***Share Repurchase***

On December 5, 2024, the Company repurchased 158,947 shares of its authorized and outstanding shares of common stock at a book value of $5,033.15 per share (in whole dollars) for a total repurchase price of $800 which was distributed in cash to its immediate parent. As a result of this transaction, the Company's capital stock was decreased by $5 and its gross paid in and contributed surplus was decreased by $795. The transaction was approved by the Company's board of directors and NY DFS.

On June 20, 2024, the Company repurchased 153,885 shares of its authorized and outstanding shares of common stock at a book value of $5,198.71 per share (in whole dollars) for a total repurchase price of $800 which was distributed in cash to its immediate parent. As a result of this transaction, the Company's capital stock was decreased by $5 and its gross paid in and contributed surplus was decreased by $795. The transaction was approved by the Company's board of directors and NY DFS.

On June 11, 2024, the Company amended and restated its charter for the purpose of increasing the par value of the 1,758,158 authorized shares of common stock from $20 per share to $30 per share, thereby increasing the amount of authorized capital from $35 to $53. This transaction was approved by the Company's board of directors and NY DFS.

On December 21, 2023, the Company repurchased 188,228 shares of its authorized and outstanding shares of common stock at a book value of $5,047.10 per share (in whole dollars) for a total repurchase price of $950, which was distributed in cash to its immediate parent. As a result of this transaction, the Company's capital stock was decreased by $4 and its gross paid in and contributed surplus was decreased by $946. The transaction was approved by the Company's board of directors and NY DFS.

***Blackboard Commutation***

Effective January 1, 2024, Glatfelter and Marbleshore ("Blackboard Insurers") entered into a commutation agreement that transferred the business previously ceded by the Blackboard Insurers to National Union back to the Balance Sheet of the Blackboard Insurers. Net loss reserve of $102 were transferred in the transaction. Immediately after the commutation the Blackboard Insurers joined the Combined Pool.

***C. Amounts Due to or from Related Parties***

<u><br></u>

At December 31, 2025 and 2024, the Company reported the following receivables/payables balances from/to its Ultimate Parent, subsidiaries and affiliates (excluding reinsurance transactions). Intercompany agreements have defined settlement terms and related receivables are reported as nonadmitted if balances due remain outstanding more than ninety days past the due date as specified in the agreement.

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

34 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2025** | **2024** |
| Balances with National Union | $**61** | $65 |
| Balances with other member pool companies | **4** |  |
| Balances with other affiliates | **68** | 75 |
| **Receivable from parent, subsidiaries and affiliates** | $**133** | $**140** |
| Balances with other member pool companies | **41** | 42 |
| Balances with other affiliates | **37** | 29 |
| **Payable to parent, subsidiaries and affiliates** | $**78** | $**71** |

---

Current federal and foreign taxes payable under the Tax Sharing Agreement at December 31, 2025 and 2024 were $60 and $4, respectively.

AIG uses centralized cash management in which AIG controls all cash transactions and maintains certain cash accounts on behalf of its subsidiaries, including American Home. The balance included in intercompany receivable is $44 and $60 at December 31, 2025 and 2024, respectively.

The Company did not change its methods of establishing terms regarding any transactions with its affiliates during the years ended December 31, 2025 or 2024.

***D. Guarantees or Contingencies for Related Parties***

<u><br></u>

The Company has issued guarantees whereby it unconditionally and irrevocably guarantees all present and future obligations and liabilities arising from the policies of insurance issued by certain insurers who, as of the guarantee issue date, were members of the AIG holding company group. The guarantees were provided in order to secure or maintain the guaranteed companies' rating status issued by certain rating agencies, as disclosed in Note 10.

***E. Management, Service Contract and Cost Sharing Arrangements***

<u><br></u>

As an affiliated company of AIG, the Company utilizes centralized services from AIG and its affiliates. The Company is allocated a charge for these services, based on the amount of incremental expense associated with operating the Company as a separate legal entity. The amount of expense allocated to the Company each period was determined based on an analysis of services provided to the Company.

The following table summarizes fees incurred related to affiliates that exceeded one-half of one percent of the Company's admitted assets during 2025, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
| **Affiliates** | **2025** | **2024** | **2023** |
| AIG Global Claims Services, Inc. | $**131** | $131 | $134 |
| AIG PC Global Services, Inc. | **187** | 120 | 165 |
| **&nbsp;&nbsp;&nbsp;&nbsp; Total** | $**318** | $**251** | $**299** |

---

***F. Borrowed Money***

<u><br></u>

The Company (among other affiliates) is a borrower under a Loan Agreement, with AIG, as lender, pursuant to which the Company may borrow funds from AIG from time to time (the "Loan Facility"). The aggregate amount of all loans that may be outstanding under the Loan Facility at a given time is $500.

As of December 31, 2025 and 2024, the Company had no outstanding liability pursuant to this Loan Facility.

Significant debt terms and covenants include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company must preserve and maintain its legal existence while maintaining all rights, privileges and franchises necessary to the normal conduct of its business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company must take, or cause to be taken, all other actions reasonably necessary or desirable to preserve and defend the rights of the Lender to payment hereunder, and to assure to the Lender the benefits hereof; and

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

35 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company must not merge with or into or consolidate with any other person, sell, transfer or dispose of all or substantially all of its assets or undergo any change in the control of its voting stock unless (a) such merger or consolidation is with or into a wholly-owned subsidiary of Lender, (b) such sale or transfer is to a wholly-owned subsidiary of the Lender or (c) The Company receives the prior written authorization from the Lender.

There have been no violations of the terms and covenants associated with the debt issuance.

The Dubai branch of the Company has an outstanding liability for borrowed money, issued on December 23, 2025, in the amount of $5 due to AIG Transaction Execution Limited (ATEL). The principal amount is due on the one month anniversary of the date on which the loan was made. At the option of the Company, early repayment may be made. Interest at a rate equal to 3.712% is required to be paid at maturity. For the year ended December 31, 2025 , total interest paid in whole dollars was $15,982.

Refer to Note 11 E regarding funds borrowed from FHLB.

**7. Reinsurance** 

<u><br></u>

In the ordinary course of business, the Company may use both treaty and facultative reinsurance to minimize its net loss exposure to a) any single catastrophic loss event; b) an accumulation of losses from a number of smaller events; or c) provide greater risk diversification. Based on the terms of the reinsurance contracts, a portion of expected IBNR losses will be recoverable in accordance with terms of the reinsurance protection purchased. This determination is necessarily based on the estimate of IBNR and accordingly, is subject to the same uncertainties as the estimate of IBNR. Ceded amounts related to paid and unpaid losses and loss expenses with respect to these reinsurance agreements are generally substantially collateralized. The Company remains liable to the extent that the reinsurers do not meet their obligation under the reinsurance contracts after any collateral is exhausted, and as such, the financial condition of the reinsurers is regularly evaluated and monitored for concentration of credit risk. In addition, the Company assumes reinsurance from other insurance companies.

The following table presents direct, assumed reinsurance and ceded reinsurance written and earned premiums for the years ended December 31, 2025, 2024 and 2023:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Years Ended December 31,** | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Written** | **Earned** | **Written** | **Earned** | **Written** | **Earned** |
| Direct premiums | $**443** | $**447** | $451 | $461 | $460 | $388 |
| Reinsurance premiums assumed: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Affiliates | **7653** | **7778** | 7733 | 7662 | 7649 | 7642 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-affiliates | **166** | **194** | 170 | 121 | 200 | 158 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Gross Premiums** | $**8262** | $**8419** | $**8354** | $**8244** | $**8309** | $**8188** |
| Reinsurance premiums ceded: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Affiliates | **1214** | **1419** | 1482 | 1501 | 1546 | 1341 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-affiliates | **2586** | **2529** | 2584 | 2598 | 2544 | 2595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Premiums** | $**4462** | $**4471** | $**4288** | $**4145** | $**4219** | $**4252** |

---

As of December 31, 2025 and 2024, and for the years then ended, the Company's unearned premium reserves, paid losses and LAE, and reserves for losses and LAE (including IBNR), have been reduced for reinsurance ceded as follows:

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36 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | | |
|:---|:---|:---|:---|
| | **Unearned Premium Reserves** | **Paid Losses and LAE** | **Reserves for Losses and LAE** |
| **December 31, 2025:** | | | |
| &nbsp;&nbsp;&nbsp;**Affiliates** | $**484** | $**83** | $**5919** |
| &nbsp;&nbsp;&nbsp;**Non-affiliates** | **963** | **627** | **6381** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total** | $**1447** | $**710** | $**12300** |
| **December 31, 2024:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Affiliates | $654 | $85 | $6138 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-affiliates | 907 | 591 | 6694 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total** | $**1561** | $**676** | $**12832** |

---

 ***A. Reinsurance Return Commission***

<u><br></u>

The maximum amount of return commission which would have been due to reinsurers if all of the Company's reinsurance had been cancelled as of December 31, 2025 and 2024 with the return of the unearned premium reserve is as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Assumed Reinsurance** | **Assumed Reinsurance** | **Ceded Reinsurance** | **Ceded Reinsurance** | **Net** | **Net** |
| | **Premium Reserve** | **Commission Equity** | **Premium Reserve** | **Commission Equity** | **Premium Reserve** | **Commission Equity** |
| **December 31, 2025** | | | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;**Affiliates** | $**3625** | $**660** | $**484** | $**89** | $**3142** | $**571** |
| &nbsp;&nbsp;&nbsp;&nbsp;**All Other** | **140** | **26** | **963** | **177** | **(823)** | **(151)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total** | $**3765** | $**686** | $**1447** | $**266** | $**2319** | $**420** |
| **December 31, 2024** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Affiliates | $3702 | $776 | $654 | $122 | $3048 | $655 |
| &nbsp;&nbsp;&nbsp;&nbsp;All Other | 167 | 35 | 907 | 169 | (740) | (134) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total** | $**3869** | $**811** | $**1561** | $**291** | $**2308** | $**521** |

---

***B. Unsecured Reinsurance Recoverable***

The aggregate unsecured reinsurance balances (comprising recoverables for paid and unpaid losses and LAE and unearned premium reserves) in excess of three percent of policyholders' surplus at December 31, 2025 and 2024 with respect to an individual reinsurer, and each of such reinsurer's related group members having an unsecured aggregate reinsurance balance with the Company, are as follows:

---

| | | |
|:---|:---|:---|
| **Reinsurer** | **2025** | **2024** |
| Affiliates: |  |  |
| &nbsp;&nbsp;Combined Pool\* | $**5756** | $5984 |
| &nbsp;&nbsp;Eaglestone | **432** | 444 |
| &nbsp;&nbsp;Other affiliates | **207** | 321 |
| **Total affiliates** | $**6395** | $**6749** |
| &nbsp;&nbsp;Berkshire Hathaway Group | **154** | 143 |
| &nbsp;&nbsp;Swiss Reinsurance Group | **281** | 306 |
| &nbsp;&nbsp;Munich Reinsurance Group | **241** | 303 |
| &nbsp;&nbsp;Hannover Re Group | **326** | 306 |
| &nbsp;&nbsp;Everest Re Group | **342** | 327 |
| &nbsp;&nbsp;Lloyds of London\*\* | **186** | 143 |
| **Total Non-affiliates** | $**1530** | $**1528** |
| **Total affiliates and non-affiliates** | $**7925** | $**8277** |

---

\* Includes intercompany pooling impact of $449 related to Unearned Premium Reserve, $5,150 related to Reserves for Losses and LAE and $23 related to Paid losses and LAE as of and for the year ended December 31, 2025, and $515, $5,324, and $23, respectively, as of and for the year ended December 31, 2024.

\*\* Lloyds of London was below 3% threshold for 2024

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37 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***C.Reinsurance Recoverable in Dispute***

At December 31, 2025 and 2024, the aggregate of all disputed items did not exceed ten percent of capital and surplus and there were no amounts in dispute for any single reinsurer that exceeded five percent of capital and surplus. The total reinsurance recoverable balances in dispute are $56 and $36 as of December 31, 2025 and 2024, respectively.

***D. Retroactive Reinsurance***

On January 20, 2017, the Combined Pool entered into an adverse development reinsurance agreement with NICO under which the Combined Pool ceded to NICO eighty percent of its reserve risk above an attachment point on substantially all of its U.S. Commercial long-tail exposures for accident years 2015 and prior. Under this agreement, the Combined Pool ceded to NICO eighty percent of net paid losses on subject business on or after January 1, 2016 in excess of $25,000 of net paid losses, up to an aggregate limit of $25,000. At NICO's 80 percent share, NICO's limit of liability under the contract is $20,000. The Combined Pool paid consideration of approximately $10,188 in February 2017, including interest at 4 percent per annum from January 1, 2016 through date of payment. American Home's share of the consideration paid was $3,566. NICO placed the consideration received into a collateral trust account as security for NICO's claim payment obligations, and Berkshire Hathaway Inc. has provided a parental guarantee to secure NICO's obligations under the agreement.

American Home accounted for this transaction as prospective reinsurance, except that the surplus gain associated with the ADC has been reported in a segregated surplus account and does not form a part of the Company's *Unassigned surplus*.

The total surplus gain recognized by the Combined Pool as of December 31, 2025, 2024 and 2023 was $2,117, $1,971, and $1,514, respectively. American Home's share of this gain as of December 31, 2025, 2024 and 2023 was $789, $731 and $627, respectively. The surplus gain is presented as segregated surplus and subject to the applicable dividend restrictions. This amount must be restricted in surplus until such time as the actual retroactive reinsurance recovered from NICO exceeds the consideration paid for the cession.

***E. Reinsurance Agreements Qualifying for Reinsurer Aggregation***

In 2011, the Combined Pool companies entered into a loss portfolio transfer reinsurance agreement with Eaglestone, an affiliate, which provides coverage up to a limit of $5,000 for the Pool's net asbestos exposures. Effective the same date, Eaglestone retroceded the majority of this exposure to NICO, an unaffiliated company. NICO provides coverage up to a limit of $3,500 for subject business covered under the agreement. NICO administers claims and pursues amounts recoverable from the Combined Pool companies' reinsurers with respect to paid losses and loss adjustment expenses. To the extent that the prior reinsurers pay, the amounts are collected and retained by NICO. NICO maintains funds in trust for the benefit of Eaglestone under the contract; as of December 31, 2025 and 2024 the amount in trust was $1,814 and $1,660, respectively. The amount of the unexhausted limit under the NICO agreement as of December 31, 2025 and 2024 was $797 and $906, respectively. The Company has accounted for its cession to Eaglestone as prospective reinsurance.

**8. Income Taxes**

**U.S. TAX LAW CHANGES**

On July 4, 2025, new U.S. tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBB Act") which, among other provisions, makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. The OBBB Act does not have a material impact to the Company.

The components of the Company's net deferred tax assets/liabilities ("DTA"/"DTL") as of December 31, 2025 and 2024 are as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **Change** | **Change** | **Change** |
| | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
| Gross DTA | $**353** | $**217** | $**570** | $325 | $256 | $581 | $28 | $(39) | $(11) |
| Statutory Valuation Allowance | **—** | **—** | **—** |  | 27 | 27 |  | (27) | (27) |
| Adjusted Gross DTA | **353** | **217** | **570** | 325 | 229 | 554 | 28 | (12) | 16 |
| Nonadmitted DTA | **46** | **—** | **46** | 11 |  | 11 | 35 |  | 35 |
| Subtotal Admitted DTA | **307** | **217** | **524** | 314 | 229 | 543 | (7) | (12) | (19) |
| DTL | **81** | **235** | **316** | 111 | 229 | 340 | (30) | 6 | (24) |
| Net Admitted DTA/(DTL) | $**226** | $**(18)** | $**208** | $203 | $— | $203 | $23 | $(18) | $5 |

---

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38 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

At December 31, 2025, the Company recorded gross deferred tax assets ("DTA") of $570. Management believes that it is more likely than not that these assets will be realized in the foreseeable future. Therefore, the Company has not recorded a valuation allowance against its deferred tax asset. Tax planning strategies had no impact on the determination of the net admitted DTA.

The following table shows the summary of the calculation for the net admitted DTA as of December 31, 2025 and 2024:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **Change** | **Change** | **Change** |
| | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** | **Ordinary** | **Capital** | **Total** |
| Carried back losses that reverse in subsequent three calendar years | $**187** | $**—** | $**187** | $89 | $— | $89 | $98 | $— | $98 |
| Adjusted gross DTAs realizable within 36 months or 15 percent of statutory surplus <br>(the lesser of 1 and 2 below) | **21** | **—** | **21** | 114 |  | 114 | (93) |  | (93) |
| &nbsp;&nbsp;&nbsp;1. Adjusted gross DTAs realizable <br>within 36 months | **21** | **—** | **21** | 114 |  | 114 | (93) |  | (93) |
| &nbsp;&nbsp;&nbsp;2. 15 percent of statutory surplus | **NA** | **NA** | **856** | NA | NA | 780 | NA | NA | 76 |
| Adjusted gross DTAs that can be offset against DTLs | **99** | **217** | **316** | 111 | 229 | 340 | (12) | (12) | (24) |
| **Total DTA admitted as the result of application of SSAP 101** | $**307** | $**217** | $**524** | $314 | $229 | $543 | $(7) | $(12) | $(19) |

---

---

| | | |
|:---|:---|:---|
| | **2025** | **2024** |
| Ratio percentage used to determine recovery period and threshold limitation amount | **471%** | 424% |
| Amount of adjusted capital and surplus used to determine recovery period and threshold limitation in (2) above. | $**5709** | $5202 |

---

The following table shows the components of the current income tax expense (benefit) for the periods listed:

---

| | | | |
|:---|:---|:---|:---|
| **For the Years Ended December 31,** | **2025** | **2024** | **Change** |
| Federal income tax | $**265** | $73 | $192 |
| Foreign income tax | **12** | 12 |  |
| Subtotal | **277** | **85** | **192** |
| Federal income tax on net capital gains | **4** | (23) | 27 |
| **Federal and foreign income taxes incurred** | $**281** | $**61** | $**220** |

---

The following table shows the components of the DTA split between ordinary and capital DTA as of December 31, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **Change** |
| **Ordinary** |  |  |  |
| Discounting of unpaid losses | $**120** | $115 | $5 |
| Nonadmitted assets | **41** | 28 | 13 |
| Unearned premium reserve | **107** | 109 | (2) |
| Bad debt expense | **5** | 3 | 2 |
| Investments | **42** | 31 | 11 |
| Intangible assets | **2** | 3 | (1) |
| Compensation and benefits accrual | **8** | 9 | (1) |
| Deferred ceding commission liability | **19** | 17 | 2 |
| Other temporary differences | **9** | 10 | (1) |
| Subtotal | **353** | 325 | 28 |
| Nonadmitted | **46** | 11 | 35 |
| **Admitted ordinary deferred tax assets** | $**307** | $**314** | $**(7)** |
| **Capital** |  |  |  |
| Investments | $**217** | $256 | $(39) |
| Subtotal | **217** | 256 | (39) |
| Statutory valuation allowance adjustment | **—** | 27 | (27) |
| Admitted capital deferred tax assets | **217** | 229 | (12) |
| **Admitted deferred tax assets** | $**524** | $**543** | $**(19)** |

---

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39 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

The following table shows the components of the DTL split between ordinary and capital DTL as of December 31, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **Change** |
| **Ordinary** |  |  |  |
| Investments | $**73** | $97 | $(24) |
| Tax Act adjustment to discounting of unpaid losses | **—** | 5 | (5) |
| Compensation and benefits accrual | **8** | 9 | (1) |
| Subtotal | **81** | 111 | (30) |
| **Capital** |  |  |  |
| Investments | $**234** | $228 | $6 |
| Other temporary differences | **1** | 1 |  |
| Subtotal | **235** | 229 | 6 |
| Deferred tax liabilities | **316** | 340 | (24) |
| **Net deferred tax assets/liabilities** | $**208** | $**203** | $**5** |

---

The change in net deferred tax assets is comprised of the following:

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **Change** |
| Adjusted gross deferred tax assets | $**570** | $554 | $16 |
| Total deferred tax liabilities | **(316)** | (340) | 24 |
| Net deferred tax assets/ (liabilities) | **254** | 214 | 40 |
| Tax effect of unrealized gains (losses) |  |  | (54) |
| **Total change in net deferred tax** |  |  | $**94** |
| Change in deferred tax - current year |  |  | 64 |
| Change in deferred tax - current year - other surplus items |  |  | 1 |
| Change in deferred tax - current year - total |  |  | 65 |
| Change in deferred tax – prior period correction |  |  | 29 |
| **Total change in deferred tax - current year** |  |  | $**94** |

---

The following table shows the components of opening surplus adjustments on current and deferred taxes for the year ended December 31, 2025:

---

| | | | |
|:---|:---|:---|:---|
| | **Current** | **Deferred** | **Total** |
| SSAP 3 impact: |  |  |  |
| SSAP 3 - general items | $(21) | $1 | $(20) |
| SSAP 3 - statutory valuation allowance |  | 28 | 28 |
| Subtotal SSAP 3 | $(21) | $29 | $8 |
| SSAP 3 - unrealized gain/loss |  | (4) | (4) |
| SSAP 3 - adjusted tax assets and liabilities | (21) | 25 | 4 |
| SSAP 3 - nonadmitted impact |  | (25) | (25) |
| **Total SSAP 3 impact** | $**(21)** | $**—** | $**(21)** |

---

The provision for federal and foreign income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The following table presents a reconciliation of such differences in arriving at total taxes related to the Company for the years ended December 31, 2025, 2024 and 2023:

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- &nbsp;&nbsp;&nbsp;&nbsp;

40 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|<br>**Description** | **Amount** | **Tax Effect** | **Amount** | **Tax Effect** | **Amount** | **Tax Effect** |
| Net Income (Loss) Before Federal Income Taxes and Capital Gains Taxes | $**1116** | $**234** | $465 | $98 | $734 | $154 |
| Book to Tax Adjustments: |  |  |  |  |  |  |
| Tax Exempt Income, Net of Proration | **(2)** | **—** | (6) | (1) | (6) | (1) |
| Stock Options And Other Compensation | **(1)** | **—** | (2) |  | (4) | (1) |
| Change in Nonadmitted Assets | **(61)** | **(13)** | (19) | (4) | (9) | (2) |
| Change in Other Surplus items | **(6)** | **(1)** | 95 | 20 | 49 | 10 |
| Intercompany Dividends | **(25)** | **(5)** | (34) | (7) | (42) | (9) |
| Foreign Taxes | **—** | **3** |  |  |  |  |
| Statutory Valuation Allowance | **—** | **—** |  | (8) |  | (8) |
| Return to Provision | **—** | **(1)** |  | (1) |  |  |
| Lag Elimination Impact | **—** | **—** |  |  | 13 | 3 |
| Other | **2** | **(1)** | 5 | 1 | 4 | 2 |
| Total Book to Tax Adjustments | **(93)** | **(18)** | 39 |  | 5 | (6) |
| **Total Income Tax** | $**1023** | $**216** | $**504** | $**98** | $**739** | $**148** |
| Federal and Foreign Income Taxes Incurred | **—** | **277** |  | 85 |  | 16 |
| Federal Income Tax on Net Capital Gains | **—** | **4** |  | (23) |  | (4) |
| Change in Net Deferred Income Taxes | **—** | **(65)** |  | 36 |  | 136 |
| **Total Income Tax** | $**—** | $**216** | $**—** | $**98** | $**—** | $**148** |

---

As of December 31, 2025 the Company had no operating loss, foreign tax credits carry forwards, AMT credit carry forwards, capital loss carry forwards or any other unused tax credits available to offset against future taxable income

There were no deposits reported as admitted assets under Section 6603 of the Internal Revenue Service (IRS) Code as of December 31, 2025. The Company does not believe that the liability related to any federal or foreign tax loss contingencies will significantly change within the next 12 months. A reasonable estimate of such change cannot be made at this time.

As of December 31, 2025, there was a $15 liability related to tax return errors and omissions and a $17 liability related to uncertain tax positions.

The U.S. is the only major tax jurisdiction of the Company. The Company is currently under examination by the IRS for the tax years 2011 through

2019 and are engaging in the Appeals process for certain disagreed issues related to tax years 2007 through 2010.

The following federal income taxes for 2023 to 2025 are available for recoupment in the event of future net losses:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Year | Ordinary | Capital | Total |
| 26.b. | 2023 |  |  |  |
| 26.b. | 2024 | 104 |  | 104 |
| 26.b. | 2025 | 265 | 1 | 266 |

---

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41 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

The following table lists those companies that form part of the 2025 AIG consolidated federal income tax return:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Company** | **Company** | **Company** | **Company** | **Company** |
| AIG Aerospace Adjustment Services, Inc. | AIG Aerospace Insurance Services, Inc. | AIG Assurance Company | AIG BG Holdings LLC | AIG Capital Corporation |
| AIG Claims, Inc. | AIG Commercial Equipment Finance, Inc. | AIG Employee Services, Inc. | AIG FCOE, Inc. | AIG Financial Products Corp. |
| AIG Global Operations (Ireland) Limited | AIG Home Protection Company, Inc. | AIG Insurance Management Services, Inc. | AIG International Inc. | AIG Markets, Inc. |
| AIG Matched Funding Corp. | AIG MEA Investments and Services, LLC | AIG MGU Holdings Inc. | AIG North America, Inc. | AIG PC Global Services Inc. |
| AIG Procurement Services, Inc. | AIG Property Casualty Company | AIG Property Casualty International, LLC | AIG Property Casualty U.S., Inc. | AIG Property Casualty, Inc. |
| AIG Securities Lending Corp. | AIG Shared Services | AIG Shared Services Corporation | AIG Shared Services Corporation - Management | AIG Shared Services Corporation (Philippines) |
| AIG Specialty Insurance Company | AIG UNITED GUARANTY AGENZIA DI ASSICURAZIONE | AIG Warranty Services of Florida, Inc. | AIG WarrantyGuard, Inc. | AIG.COM, Inc. |
| AIG-FP Capital Preservation Corp. | AIG-FP Matched Funding Corp. | AIG-FP Pinestead Holdings Corp. | AIGGRE Europe Real Estate Fund I | AIGGRE U.S. Real Estate Fund I |
| AIGGRE U.S. Real Estate Fund II | AIGGRE U.S. Real Estate Fund IV Lexington | AIGGRE U.S. Real Estate Fund IV Sidecar | AIU Insurance Company | AM Holdings LLC |
| American Home Assurance Company | American International Facilities Management | American International Group, Inc. | American International Realty Corporation | American International Reinsurance |
| Arthur J. Glatfelter Agency, Inc. | Blackboard Customer Care Insurance Services | Glatfelter Insurance Company | Blackboard Services, LLC | Marbleshore Specialty Insurance Company |
| Blackboard U.S. Holdings, Inc. | Commerce and Industry Insurance Company | Corebridge REI Bartlett Investor III LLC | Corebridge REI Lexington Holdco LLC | Corebridge REI Papermill Investor III LLC |
| Design Professionals Association | Eaglestone Reinsurance Company | First Principles Capital Management, LLC | GIG of Missouri, Inc. | Glatfelter Claims Management, Inc. |
| Glatfelter Properties, LLC | Glatfelter Underwriting Services, Inc. | Global Loss Prevention, Inc. | Granite State Insurance Company | GRE DC Ballpark Investor, LLC |
| GRE U.S. LT Apartments Investor Lexington | Health Direct, Inc. | Illinois National Insurance Co. | JVJE Real Estate Holdings, LLC | LBMA Equipment Services, Inc. |
| Lexington Insurance Company | Lexington Specialty Insurance Agency, Inc. | MG Reinsurance Limited | MIP PE Holdings, LLC | Morefar Marketing, Inc. |
| Mt. Mansfield Company, Inc. | National Union Fire Insurance | National Union Fire Insurance Company | New Hampshire Insurance Company | PCG 2019 Corporate Member Limited |
| Pearce & Pearce, Inc. | Risk Specialists Companies | Service Net Solutions of Florida, LLC | Service Net Warranty, LLC | SNW Insurance Agency, LLC |
| Spruce Peak Realty, LLC | Stowe Mountain Holdings, Inc. | Stratford Insurance Company | Susquehanna Agents Alliance, LLC | The Glatfelter Agency, Inc. |
| The Insurance Company of the State of Pennsylvania | Tudor Insurance Company | Validus Specialty Underwriting Services, Inc. | Volunteer Firemen's Insurance Services, Inc. | Western World Insurance Company |

---

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42 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

**9.&nbsp;&nbsp;&nbsp;&nbsp;Capital and Surplus and Dividend Restrictions**

<u><br></u>

***A.Dividend Restrictions***

Under New York law, the Company may pay dividends only from *Unassigned surplus* determined on a statutory basis.

New York domiciled companies are restricted (on the basis of the lower of 10 percent of statutory earned surplus as defined in NY Insurance Law section 4105, adjusted for special surplus items, as of the last statement on file with the Superintendent, or 100 percent of adjusted net investment income for the preceding thirty-six month period ended as of the last statement on file with the Superintendent) as to the amount of ordinary dividends they may declare or pay in any twelve-month period without the prior approval of the NY DFS. The maximum dividend amount the Company can pay in 2026, as of December 31, 2025 is $492.

Other than the limitations above, there are no restrictions placed on the portion of Company profits that may be paid as ordinary dividends to the stockholders.

The Company paid the following dividends during 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2025** |  |  | **State approval** | **State approval** |
| **Date paid** | **Amount** | **Type of Dividend** | **Required** | **Obtained** |
| **03/25/25** | $**50** | **Ordinary** | **No** | **No** |
| **06/24/25** | **200** | **Ordinary** | **No** | **No** |
| **09/24/25** | **225** | **Ordinary** | **No** | **No** |
| **Total dividends paid** | $**475** |  |  |  |

---

The Company paid the following dividends in 2024.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2024** |  |  | **State approval** | **State approval** |
| **Date paid** | **Amount** | **Type of Dividend** | **Required** | **Obtained** |
| 03/25/24 | $200 | Ordinary | No | No |
| 06/25/24 | 200 | Ordinary | No | No |
| 09/23/24 | 140 | Ordinary | No | No |
| **Total dividends paid** | $**540** |  |  |  |

---

***B.Capital & Surplus***

Changes in balances of special surplus funds are due to adjustments in the amounts of reserves transferred under retroactive reinsurance agreements and when cash recoveries exceed the consideration paid.

The portion of *Unassigned surplus* at December 31, 2025 and 2024 represented or reduced by each item below is as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **As Adjusted \*<br> 2024** | **2024** |
| Unrealized gains and losses (net of taxes) | $**319** | $104 | $107 |
| Nonadmitted asset values | **(242)** | (171) | (146) |
| Provision for reinsurance | **(46)** | (54) | (54) |
| \* As Adjusted includes SSAP 3 prior year adjustments |  |  |  |

---

The Company exceeded minimum RBC requirements at both December 31, 2025 and 2024.

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43 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

**10. Contingencies** 

***A.Legal Proceedings***

In the normal course of business, AIG and its subsidiaries are, like others in the insurance and financial services industries in general, subject to regulatory and government investigations and actions, and litigation and other forms of dispute resolution in a large number of proceedings pending in various domestic and foreign jurisdictions. Certain of these matters involve potentially significant risk of loss due to potential for significant jury awards and settlements, punitive damages or other penalties. Many of these matters are also highly complex and seek recovery on behalf of a class or similarly large number of plaintiffs. It is therefore inherently difficult to predict the size or scope of potential future losses arising from these matters. In AIG's insurance and reinsurance operations, litigation and arbitration concerning the scope of coverage under insurance and reinsurance contracts, and litigation and arbitration in which its subsidiaries defend or indemnify their insureds under insurance contracts, are generally considered in the establishment of loss reserves. Separate and apart from the foregoing matters involving insurance and reinsurance coverage, AIG, its subsidiaries and their respective officers and directors are subject to a variety of additional types of legal proceedings brought by holders of AIG securities, customers, employees and others, alleging, among other things, breach of contractual or fiduciary duties, bad faith and violations of federal and state statutes and regulations. With respect to these other categories of matters not arising out of claims for insurance or reinsurance coverage, the Company establishes reserves for loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In many instances, the Company is unable to determine whether a loss is probable or to reasonably estimate the amount of such a loss and, therefore, the potential future losses arising from legal proceedings may exceed the amount of liabilities that has been recorded in its financial statements covering these matters. While such potential future charges could be material, based on information currently known to management, management does not believe, other than may be discussed below, that any such charges are likely to have a material adverse effect on the Company's financial position or results of operation.

Additionally, from time to time, various regulatory and governmental agencies review the transactions and practices of AIG and its subsidiaries in connection with industry-wide and other inquiries into, among other matters, the business practices of current and former operating insurance subsidiaries. The Company has cooperated, and will continue to cooperate, in producing documents and other information in response to such requests.

***B. Leases***

Lease expenses are allocated to the Company based upon the percentage of space occupied with the final share of cost based upon its percentage participation in the Combined Pool. <br>

***C. Other Commitments***

As part of its hedge fund, private equity and real estate equity portfolio investments, as of December 31, 2025, the Company may be called upon for additional capital investments of up to $357.

At December 31, 2025 the Company had $22 of outstanding commitments related to various funding obligations associated with investments in commercial and residential mortgage loans.

***D.Guarantees***

The Company had issued guarantees whereby it unconditionally and irrevocably guaranteed all present and future obligations and liabilities arising from the policies of insurance issued by certain insurers who, as of the guarantee issue date, were members of the AIG holding company group. The guarantees were provided in order to secure or maintain the guaranteed companies' rating status issued by certain rating agencies. The Company would be required to perform under the guarantee in the event that a guaranteed entity failed to make payments due under policies of insurance issued during the period of the guarantee. The Company has not been required to perform under any of the guarantees. The Company remains contingently liable for all policyholder obligations associated with insurance policies issued by the guaranteed entity during the period in which the guarantee was in force.

Each guaranteed entity has reported invested assets in excess of their direct (prior to reinsurance) policyholder liabilities. Additionally, the Company is party to an agreement with AIG whereby AIG has agreed to make any payments due under the guarantees in the Company's place and stead. Furthermore, for any former affiliate that has been sold, the purchaser has provided the Company with hold harmless agreements relative to the guarantee of the divested affiliate. Accordingly, management believes that the likelihood of payment under any of the guarantees is remote.

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44 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

The following schedule sets forth the effective and termination dates (agreements with guarantees in run off), of each guarantee, the amount of direct policyholder obligations guaranteed, the invested assets and policyholder surplus for each guaranteed entity as of December 31, 2025:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Guaranteed Company** | | **Date Issued** | **Date Terminated** | **Policyholder Obligations @ 12/31/2025** | **Invested Assets @ 12/31/2025** | **Estimated Loss @ 12/31/2025** | **Policyholders' Surplus 12/31/2025** |
| **21st Century Advantage Insurance Company (f/k/a AIG Advantage Insurance Company)** |  | **12/15/1997** | **8/31/2009** | $**—** | $**—** | $**—** | $**—** |
| **21st Century North America Insurance Company (f/k/a American International Insurance Company)** |  | **11/5/1997** | **8/31/2009** | **6** | **685** | **—** | **694** |
| **21st Century Pinnacle Insurance Company (f/k/a American International Insurance Company of New Jersey)** |  | **12/15/1997** | **8/31/2009** | **—** | **21** | **—** | **22** |
| **AIG Edison Life Insurance Company (f/k/a GE Edison Life Insurance Company)** |  | **8/29/2003** | **3/31/2011** | **5170** | **57294** | **—** | **2599** |
| **American General Life and Accident Insurance Company** | **\*** | **3/3/2003** | **9/30/2010** | **1406** | **258953** | **—** | **12503** |
| **American General Life Insurance Company** | **\*** | **3/3/2003** | **12/29/2006** | **6626** | **258953** | **—** | **12503** |
| **American International Assurance Company (Australia) Limited** | **\*\*** | **11/1/2002** | **10/31/2010** | **443** | **1799** | **—** | **574** |
| **Chartis Europe, S.A. (f/k/a AIG Europe, S.A.)** | **\*** | **9/15/1998** | **12/31/2012** | **7160** | **9645** | **—** | **2456** |
| **AIG Seguros Mexico, S.A. de C.V. (f/k/a AIG Mexico Seguros Interamericana, S.A. de C.V.)** | **\*** | **12/15/1997** | **3/31/2015** | **146** | **192** | **—** | **187** |
| **Chartis UK (f/k/a Landmark Insurance Company, Limited (UK))** | **\*** | **3/2/1998** | **11/30/2007** | **147** | **7023** | **—** | **2329** |
| **Farmers Insurance Hawaii (f/k/a AIG Hawaii Insurance Company, Inc.)** |  | **11/5/1997** | **8/31/2009** | **—** | **29** | **—** | **28** |
| **Lloyd's Syndicate (1414) Ascot (Ascot Underwriting Holdings Ltd.)** |  | **1/20/2005** | **10/31/2007** | **2** | **2345** | **—** | **268** |
| **SunAmerica Annuity and Life Assurance Company (Anchor National Life Insurance Company)** | **\*** | **1/4/1999** | **12/29/2006** | **437** | **258953** | **—** | **12503** |
| **SunAmerica Life Insurance Company** | **\*** | **1/4/1999** | **12/29/2006** | **1493** | **258953** | **—** | **12503** |
| **The United States Life Insurance Company in the City of New York** | **\*** | **3/3/2003** | **4/30/2010** | **2067** | **34786** | **—** | **2239** |
| **The Variable Annuity Life Insurance Company** | **\*** | **3/3/2003** | **12/29/2006** | **2958** | **81961** | **—** | **2552** |
| **Total** |  |  |  | $**28061** | $**1231592** | $**—** | $**63960** |

---

\* Current affiliates

\*\*AIA was formerly a subsidiary of AIG. In previous years AIA provided the direct policyholder obligations as of each year end. However, starting in 2014 AIA declined to provide financial information related to these guarantees. The financial information reflects amounts as of December 31, 2012, at which time the guaranteed entities had invested assets in excess of direct policyholder obligations and were in a positive surplus position. Such amounts continue to remain the Company's best estimate given available financial information. The guaranteed policyholder obligations will decline as the policies expire.

***E. Joint and Several Liabilities***

<u><br></u>

AIUI and the Company are jointly and severally obligated to the policyholders of their Japan branches, in connection with transfers of the business of those Japan branches to Japan-domiciled affiliates in 2013 and 2014, respectively. Under the terms of the transfer agreement, the Japan affiliates have agreed to be responsible for 100% of the obligations associated with such policies, and management expects such companies to satisfy their obligation. The Company carries no reserves with respect to such liabilities. The Japanese affiliates carried $2 and $5 of loss reserves in respect of such policies as of December 31, 2025 and 2024, respectively. As of December 31, 2025, if the Japan affiliates were to fail to satisfy their obligations, the Company's share of the aggregate exposure under the pooling agreement is $1.

Each Pool member is also jointly and severally obligated to the other Pool members, in proportion to their pool share, in the event any other Pool member fails.

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45 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

**11. Other Significant Matters**

<u><br></u>

***A.Other Assets***

<u><br></u>

As of December 31, 2025 and 2024, other admitted assets as reported in the accompanying *Statements of Admitted Assets* were comprised of the following balances:

---

| | | |
|:---|:---|:---|
| **Other admitted assets** | **2025** | **2024** |
| Deposit accounting assets | $**8** | $8 |
| Equities in underwriting pools and associations | **5** | 5 |
| Guaranty funds receivable on deposit | **4** | 4 |
| Loss funds on deposit | **119** | 104 |
| Contra Investments | **(72)** | (68) |
| Other assets | **79** | 71 |
| Collateral on derivative liabilities | **15** | 1 |
| **Total other admitted assets** | **158** | $125 |

---

***B.&nbsp;&nbsp;&nbsp;&nbsp;Other Liabilities***

<u><br></u>

As of December 31, 2025 and 2024, other liabilities as reported in the accompanying *Statements of Liabilities, Capital and Surplus* were comprised of the following balances:

---

| | | |
|:---|:---|:---|
| **Other liabilities** | **2025** | **2024** |
| Assumed Mortgage Guaranty Contingency Reserve | $**191** | 191 |
| Ceded Mortgage Guaranty Contingency Reserve | **(191)** | (191) |
| Escrow Deposit Liability | **119** | 112 |
| Other accrued liabilities | **107** | 176 |
| Retroactive reinsurance reserves - assumed | **23** | 29 |
| Retroactive reinsurance reserves - ceded | **(38)** | (39) |
| Deferred commission earnings | **91** | 82 |
| Escrow funds (NICO) | **19** | 30 |
| Servicing carrier liability | **12** | 14 |
| Collateral on derivative assets | **—** | 24 |
| Paid loss clearing contra liability (loss reserve offset for paid claims) | **(75)** | (26) |
| **Total other liabilities** | $**258** | **402** |

---

***C.&nbsp;&nbsp;&nbsp;&nbsp;Other (Expense) Income***

<u><br></u>

For the years ended December 31, 2025, 2024 and 2023, other (expense) income as reported in the accompanying *Statements of Operations and Changes in Capital and Surplus* were comprised of the following balances:

---

| | | | |
|:---|:---|:---|:---|
| **Other income (expense)** | **2025** | **2024** | **2023** |
| Fee income on deposit programs | $**3** | $3 | $3 |
| Interest expense on reinsurance program | **(24)** | (42) | (29) |
| Other income | **3** | 7 | 7 |
| **Total other expense** | $**(18)** | $**(32)** | $**(19)** |

---

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46 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***D.&nbsp;&nbsp;&nbsp;&nbsp;Non-Cash items***

<u><br></u>

For the years ended December 31, 2025, 2024 and 2023, the amounts reported in the *Statements of Cash Flow* are net of the following non-cash items:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Non-cash transactions** | **Classification** | **2025** | **2024** | **2023** |
| **Funds Held:** |  |  |  |  |
| &nbsp;&nbsp;Premiums collected | Operating | $**(6)** | $(1) | $(8) |
| &nbsp;&nbsp;Benefit and loss related payments | Operating | **(17)** | 15 | 23 |
| &nbsp;&nbsp;Interest | Operating | **(19)** | (39) | (26) |
| &nbsp;&nbsp;Commission and other expense paid | Operating | **9** | 5 | 9 |
| &nbsp;&nbsp;Funds held | Miscellaneous | **(33)** | (20) | (1) |
| **Securities received/transferred:** |  |  |  |  |
| &nbsp;&nbsp;Securities received | Investing | **497** | 495 | 308 |
| &nbsp;&nbsp;Securities transferred | Investing | **(141)** | (91) | (596) |

---

***E.&nbsp;&nbsp;&nbsp;&nbsp;Federal Home Loan Bank ("FHLB") Agreements***

<u><br></u>

The Company is a member of the FHLB of New York. Such membership requires ownership of stock in the FHLB. The Company owned an aggregate of $4 and $4 of stock in the FHLB at December 31, 2025 and 2024, respectively.

Through its membership, the Company has conducted business activity (borrowings) with the FHLB. The Company utilizes the FHLB facility to supplement liquidity or for other uses deemed appropriate by management. The outstanding borrowings are being used primarily for interest rate risk management purposes in connection with certain reinsurance arrangements, and the balances are expected to decline as underlying premiums are collected. The Company is required to pledge certain mortgage-backed securities, government and agency securities and other qualifying assets to secure advances obtained from the FHLB. The FHLB applies a haircut to collateral pledged to determine the amount of borrowing capacity it will provide to its member. As of December 31, 2025, the Company had an actual borrowing capacity of $979 based on qualified pledged collateral. At December 31, 2025, the Company had borrowings of $0 from the FHLB.

***F.Unused commitments and lines of credit for financing arrangements***

<u><br></u>

---

| | | | | |
|:---|:---|:---|:---|:---|
| | 2025 | 2025 | 2024 | 2024 |
| | Unused Commitments | Unused Lines of Credit | Unused Commitments | Unused Lines of Credit |
| | Unused Commitments | Unused Lines of Credit | Unused Commitments | Unused Lines of Credit |
| Short-Term (contracts terminating in 12 months or less) | $— | $5 | $— | $— |
| Long-Term (contracts terminating in more than 12 months) | $— | $1479 | $— | $1510 |
| TOTAL | $— | $1484 | $— | $1510 |

---

***G.Insurance-Linked Securities***

<u><br></u>

As of December 31, 2025 and 2024, the Company was not a ceding insurer in catastrophe bond reinsurance transactions in force.

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47 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.

------

**American Home Assurance Company**

Statutory Basis Financial Statements

**(Dollars in Millions)**

***H.Reconciliation to Annual Statement***

<u><br></u>

There were no adjustments to the amounts previously reported to the Department in the 2025 Annual Statements, to those reported in the accompanying statutory basis financial statements

The following is a reconciliation of amounts previously reported to the Department in the 2024 Annual Statements, to those reported in the accompanying statutory basis financial statements:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Assets** | **Liabilities** | **Net Income** | **Surplus** |
| **As per annual statements** | $**19072** | $**13657** | $**415** | $**5415** |
| **Realized collateral adjustment** | **(13)** | **(3)** | **(10)** | **(10)** |
| **As per audited financial statements** | $**19059** | $**13654** | $**405** | $**5405** |

---

The 2024 reconciliation above reflects the impact of the following adjustments:

Realized collateral adjustment - To adjust for a collateral transaction that was incorrectly cleared through realized gains (losses).

There were no adjustments to the amounts previously reported to the Department in the 2023 Annual Statements, to those reported in the accompanying statutory basis financial statements.

**12.&nbsp;&nbsp;&nbsp;&nbsp;Subsequent Events** 

<u><br></u>

Subsequent events have been considered through April 22, 2026 for these Financial Statements issued on April 22, 2026.

Type I – Recognized Subsequent Events:

None.

Type II – Nonrecognized Subsequent Events:

None.

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48 NOTES TO FINANCIAL STATEMENTS - As of December 31, 2025 and 2024 and for years ended December 31, 2025, 2024 and 2023.