Financial Guaranty Insurance Contracts (Tables)

6 Months Ended

Jun. 30, 2011

Financial Guaranty Insurance Contracts

Net Earned Premiums

		Second Quarter				Six Months
		2011		2010		2011		2010
		(in millions)
Scheduled net earned premiums		$	202.7	$	267.4	$	417.6	$	558.3
Acceleration of premium earnings(1)			21.0		15.4		50.6		30.8
Accretion of discount on net premiums receivable			5.8		8.6		14.8		21.3
Total financial guaranty			229.5		291.4		483.0		610.4
Other			0.5		0.7		1.0		1.3
	Total net earned premiums(2)	$	230.0	$	292.1	$	484.0	$	611.7

(1)

Reflects the unscheduled refundings of underlying insured obligations.

(2)

Excludes $18.3 million and $15.6 million in Second Quarter 2011 and 2010, respectively, and $37.4 million and $21.6 million for the Six Months 2011 and 2010, respectively, in net earned premium related to consolidated FG VIEs.

Gross Premium Receivable, Net of Ceding Commissions Roll Forward

		Six Months
		2011			2010
		(in millions)
Balance beginning of period		$	1,167.6		$	1,418.2
Change in accounting(1)			—			(19.0	)
Balance beginning of the period, adjusted			1,167.6			1,399.2
Premium written, net			102.9			178.7
Premium payments received, net			(151.7	)		(234.3	)
Adjustments to the premium receivable:
	Changes in the expected term of financial guaranty insurance contracts		(91.1	)		8.2
	Accretion of discount		16.4			23.7
	Foreign exchange translation		22.8			(65.9	)
	Other adjustments		(7.4	)		1.7
Balance, end of period		$	1,059.5		$	1,311.3

(1)

Represents elimination of premium receivable at January 1, 2010 related to consolidated FG VIEs upon the adoption of the new accounting guidance.

Expected Collections of Gross Premiums Receivable, Net of Ceding Commissions

		June 30, 2011(1)
		(in millions)
Gross premium collections expected:
2011 (July 1 - September 30)		$	54.5
2011 (October 1 - December 31)			63.6
2012			117.5
2013			103.0
2014			91.1
2015			81.4
2016 - 2020			326.3
2021 - 2025			229.3
2026 - 2030			167.7
After 2030			213.9
	Total gross expected collections(2)	$	1,448.3

(1)

Represents undiscounted amounts expected to be collected.

(2)

Total gross expected collections include $31.7 million related to FG VIEs at June 30, 2011.

Net Unearned Premium Reserve

		As of June 30, 2011									As of December 31, 2010
		Gross			Ceded			Net(1)			Gross			Ceded			Net(1)
		(in millions)
Deferred premium revenue		$	6,412.6		$	791.1		$	5,621.5		$	7,108.6		$	846.6		$	6,262.0
Contra-paid			(106.7	)		(18.1	)		(88.6	)		(146.1	)		(24.8	)		(121.3	)
	Total financial guaranty		6,305.9			773.0			5,532.9			6,962.5			821.8			6,140.7
Other			9.5			0.3			9.2			10.4			—			10.4
	Total	$	6,315.4		$	773.3		$	5,542.1		$	6,972.9		$	821.8		$	6,151.1

(1)

Net unearned premium reserve excludes $306.7 million and $193.2 million related to FG VIEs as of June 30, 2011 and December 31, 2010, respectively.

Expected Timing of Financial Guaranty Insurance Premium and Loss Recognition

		As of June 30, 2011
		Scheduled Net Earned Premium		Net Expected Loss to be Expensed(1)		Net
		(in millions)
2011 (July 1 - September 30)		$	180.1	$	51.1	$	129.0
2011 (October 1 - December 31)			167.8		40.4		127.4
2012			574.7		109.2		465.5
2013			480.5		64.5		416.0
2014			424.1		47.3		376.8
2015			374.9		37.6		337.3
2016 - 2020			1,408.3		121.5		1,286.8
2021 - 2025			886.0		65.9		820.1
2026 - 2030			543.2		33.2		510.0
After 2030			581.9		18.4		563.5
	Total present value basis(2)(3)		5,621.5		589.1		5,032.4
Discount			341.4		442.1		(100.7	)
	Total future value	$	5,962.9	$	1,031.2	$	4,931.7

(1)

These amounts reflect the Company's estimate as of June 30, 2011 of expected losses to be expensed and are not included in loss and LAE reserve because loss and LAE is only recorded for the amount by which net expected loss to be expensed exceeds deferred premium revenue, determined on a contract-by-contract basis.

(2)

Balances represent discounted amounts.

(3)

Consolidation of FG VIEs resulted in reductions of $444.5 million in future scheduled amortization of deferred premium revenue and $260.3 million in net present value of expected loss to be expensed.

Selected Information for Policies Paid in Installments

	As of June 30, 2011			As of December 31, 2010
	(dollars in millions)
Premiums receivable, net of ceding commission payable	$	1,059.5		$	1,167.6
Gross deferred premium revenue		2,384.4			2,933.6
Weighted average risk-free rate used to discount premiums		3.6	%		3.5	%
Weighted average period of premiums receivable (in years)		10.1			10.1

Financial Guaranty Insurance Present Value of Net Expected Loss and LAE to be paid Roll Forward by Sector

				Net Expected Loss to be Paid as of December 31, 2010			Economic Loss Development(2)			(Paid) Recovered Losses			Net Expected Loss to be Paid as of June 30, 2011
				(in millions)
U.S. RMBS:
	First lien:
		Prime first lien		$	1.4		$	1.8		$	—		$	3.2
		Alt-A first lien			184.4			21.8			(38.6	)		167.6
		Option ARM			523.7			(88.4	)		(168.4	)		266.9
		Subprime			200.4			(23.2	)		(15.7	)		161.5
			Total first lien		909.9			(88.0	)		(222.7	)		599.2
	Second lien:
		Closed-end second lien			56.6			(109.6	)		(41.7	)		(94.7	)
		HELOCs			(805.7	)		104.7			662.7			(38.3	)
			Total second lien		(749.1	)		(4.9	)		621.0			(133.0	)
Total U.S. RMBS					160.8			(92.9	)		398.3			466.2
Other structured finance					145.1			38.5			(3.0	)		180.6
Public finance					88.9			(13.5	)		(9.2	)		66.2
			Total	$	394.8		$	(67.9	)	$	386.1		$	713.0

				Net Expected Loss to be Paid as of December 31, 2009			Economic Loss Development(2)			(Paid) Recovered Losses			Net Expected Loss to be Paid as of June 30, 2010
				(in millions)
U.S. RMBS:
	First lien:
		Prime first lien		$	—		$	0.4		$	—		$	0.4
		Alt-A first lien			204.4			15.4			(29.0	)		190.8
		Option ARM			545.2			75.1			(49.1	)		571.2
		Subprime			77.5			69.3			(2.3	)		144.5
			Total first lien		827.1			160.2			(80.4	)		906.9
	Second lien:
		Closed-end second lien			199.3			(40.4	)		(39.9	)		119.0
		HELOCs			(232.9	)		55.0			(315.8	)		(493.7	)
			Total second lien		(33.6	)		14.6			(355.7	)		(374.7	)
Total U.S. RMBS					793.5			174.8			(436.1	)		532.2
Other structured finance					102.6			35.5			(5.6	)		132.5
Public finance					130.9			(8.1	)		(34.2	)		88.6
			Total	$	1,027.0		$	202.2		$	(475.9	)	$	753.3

(1)

Amounts include all expected payments whether or not the insured transaction VIE is consolidated. Amounts exclude reserves for mortgage business of $2.1 million as of June 30, 2011 and $2.1 million as of December 31, 2010.

(2)

Economic loss development includes the effects of changes in assumptions based on observed market trends, changes in discount rates, accretion of discount and the economic effects of loss mitigation efforts.

Reconciliation of Present Value of Net Expected Loss to be Paid and Present Value of Net Expected Loss to be Expensed

		As of June 30, 2011			As of December 31, 2010
		(in millions)
Net expected loss to be paid		$	713.0		$	394.8
Less: net expected loss to be paid for FG VIEs			(5.6	)		49.2
	Total		718.6			345.6
Contra-paid, net			88.6			121.3
Salvage and subrogation recoverable, net(1)			271.9			903.0
Loss and LAE reserve, net(2)			(490.0	)		(538.6	)
Net expected loss to be expensed(3)		$	589.1		$	831.3

(1)

June 30, 2011 amount consists of gross salvage and subrogation amounts of $307.1 million net of ceded amounts of $35.2 million which is recorded in reinsurance balances payable. The December 31, 2010 amount consists of gross salvage and subrogation amounts of $1,032.4 million net of ceded amounts of $129.4 million which is recorded in reinsurance balances payable.

(2)

Represents loss and LAE reserves, net of reinsurance recoverable on unpaid losses, excluding $2.1 million in reserves for other runoff lines of business as of June 30, 2011 and December 31, 2010.

(3)

Excludes $260.3 million and $211.9 million as of June 30, 2011 and December 31, 2010, respectively, related to consolidated FG VIEs.

Assumptions in Base Case Expected Loss Estimates Second Lien RMBS

HELOC Key Variables	As of June 30, 2011	As of March 31, 2011	As of December 31, 2010
Plateau conditional default rate	4.6 - 34.6%	4.7 - 21.4%	4.2 - 22.1%
Final conditional default rate trended down to	0.4 - 3.2%	0.4 - 3.2%	0.4 - 3.2%
Expected period until final conditional default rate	36 months	36 months	24 months
Initial conditional prepayment rate	0.9 - 15.5%	0.9 - 12.6%	3.3 - 17.5%
Final conditional prepayment rate	10%	10%	10%
Loss severity	98%	98%	98%
Initial draw rate	0.0 - 8.6%	0.0 - 5.2%	0.0 - 6.8%

Closed-End Second Lien Key Variables	As of June 30, 2011	As of March 31, 2011	As of December 31, 2010
Plateau conditional default rate	4.8 - 22.8%	7.2 - 28.9%	7.3 - 27.1%
Final conditional default rate trended down to	2.9 - 8.1%	2.9 - 8.1%	2.9 - 8.1%
Expected period until final conditional default rate achieved	36 months	36 months	24 months
Initial conditional prepayment rate	1.4 - 12.0%	0.9 - 12.7%	1.3 - 9.7%
Final conditional prepayment rate	10%	10%	10%
Loss severity	98%	98%	98%

(1)

Represents assumptions for most heavily weighted scenario (the "base case").

First Lien Liquidation Rates

		June 30, 2011			March 31, 2011			December 31, 2010
30 - 59 Days Delinquent
	Alt-A first lien		50	%		50	%		50	%
	Option ARM		50			50			50
	Subprime		45			45			45
60 - 89 Days Delinquent
	Alt-A first lien		65			65			65
	Option ARM		65			65			65
	Subprime		65			65			65
90 - Bankruptcy
	Alt-A first lien		75			75			75
	Option ARM		75			75			75
	Subprime		70			70			70
Foreclosure
	Alt-A first lien		85			85			85
	Option ARM		85			85			85
	Subprime		85			85			85
Real Estate Owned
	Alt-A first lien		100			100			100
	Option ARM		100			100			100
	Subprime		100			100			100

Key Assumptions in Base Case Expected Loss Estimates of First Lien RMBS Transactions

		As of June 30, 2011			As of March 31, 2011			As of December 31, 2010
Alt-A First Lien
	Plateau conditional default rate		2.9 - 36.6	%		2.7 - 40.2	%		2.6 - 42.2	%
	Intermediate conditional default rate		0.4 - 5.5	%		0.4 - 6.0	%		0.4 - 6.3	%
	Final conditional default rate		0.1 - 1.8	%		0.1 - 2.0	%		0.1 - 2.1	%
	Initial loss severity		65	%		65	%		60	%
	Initial conditional prepayment rate		0.0 - 28.3	%		0.4 - 40.5	%		0.0 - 36.5	%
	Final conditional prepayment rate		10	%		10	%		10	%
Option ARM
	Plateau conditional default rate		13.1 - 32.1	%		12.3 - 33.2	%		11.7 - 32.7	%
	Intermediate conditional default rate		2.0 - 4.8	%		1.8 - 5.0	%		1.8 - 4.9	%
	Final conditional default rate		0.7 - 1.6	%		0.6 - 1.7	%		0.6 - 1.6	%
	Initial loss severity		65	%		65	%		60	%
	Initial conditional prepayment rate		0.0 - 7.2	%		0.0 - 24.5	%		0.0 - 17.7	%
	Final conditional prepayment rate		10	%		10	%		10	%
Subprime
	Plateau conditional default rate		7.7 - 34.2	%		8.0 - 34.3	%		9.0 - 34.6	%
	Intermediate conditional default rate		1.2 - 5.1	%		1.2 - 5.1	%		1.3 - 5.2	%
	Final conditional default rate		0.4 - 1.7	%		0.4 - 1.7	%		0.4 - 1.7	%
	Initial loss severity		80	%		80	%		80	%
	Initial conditional prepayment rate		0.0 - 9.3	%		0.0 - 13.3	%		0.0 - 13.5	%
	Final conditional prepayment rate		10	%		10	%		10	%

Balance Sheet Classification of R&W benefits

		As of June 30, 2011							As of December 31, 2010
		Benefit for R&W		Effect of Consolidating FG VIEs			Reported on Balance Sheet		Benefit for R&W		Effect of Consolidating FG VIEs			Reported on Balance Sheet
		(in billions)
Salvage and subrogation recoverable		$	0.4	$	(0.2	)	$	0.2	$	0.9	$	(0.1	)	$	0.8
Loss and LAE reserve			0.9		(0.1	)		0.8		0.5		(0.1	)		0.4
Unearned premium reserve			0.2		—			0.2		0.2		—			0.2
	Total	$	1.5	$	(0.3	)	$	1.2	$	1.6	$	(0.2	)	$	1.4

Rollforward of Estimated Benefit from Recoveries of Representation and Warranty Breaches, Net of Reinsurance

		Future Net R&W Benefit at December 31, 2010		R&W Development and Accretion of Discount During Six Months 2011		R&W Recovered During Six Months 2011(1)			Future Net R&W Benefit at June 30, 2011(2)
		(in millions)
Prime first lien		$	1.1	$	1.8	$	—		$	2.9
Alt-A first lien			81.0		46.6		—			127.6
Option ARM			309.3		449.2		(47.3	)		711.2
Subprime			26.8		54.7		—			81.5
Closed-end second lien			178.2		61.5		—			239.7
HELOC			1,004.1		157.1		(850.8	)		310.4
	Total	$	1,600.5	$	770.9	$	(898.1	)	$	1,473.3

		Future Net R&W Benefit at December 31, 2009		R&W Development and Accretion of Discount During Six Months 2010		R&W Recovered During Six Months 2010(1)			Future Net R&W Benefit at June 30, 2010
		(in millions)
Prime first lien		$	—	$	0.8	$	—		$	0.8
Alt-A first lien			64.2		15.0		—			79.2
Option ARM			203.7		52.4		(13.3	)		242.8
Subprime			—		—		—			—
Closed-end second lien			76.5		46.5		—			123.0
HELOC			828.7		97.2		(50.9	)		875.0
	Total	$	1,173.1	$	211.9	$	(64.2	)	$	1,320.8

(1)

Gross amounts recovered are $1,015.0 million and $72.0 million for Six Months 2011 and 2010, respectively.

(2)

Includes R&W benefit of $588.9 million attributable to transactions covered by the Bank of America Agreement.

Financial Graranty Insurance U.S. RMBS Risks with R&W Benefit

		Number of Risks(1) as of				Outstanding Principal and Interest as of
		June 30, 2011		December 31, 2010		June 30, 2011		December 31, 2010
		(dollars in millions)
Prime first lien			1		1	$	54.5	$	57.1
Alt-A first lien			20		17		1,826.7		1,882.8
Option ARM			11		10		1,914.8		1,909.8
Subprime			4		1		982.7		228.7
Closed-end second lien			4		4		396.3		444.9
HELOC			15		13		3,844.9		2,969.8
	Total		55		46	$	9,019.9	$	7,493.1

(1)

A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments.

Breakdown of the development and accretion amount in the rollforward of estimated recoveries associated with alleged breaches of R&W

		Second Quarter					Six Months
		2011			2010		2011		2010
		(in millions)
Inclusion of new deals with breaches of R&W during period		$	—		$	—	$	107.1	$	62.4
Change in recovery assumptions as the result of additional file review and recovery success			—			35.5		198.4		65.3
Estimated increase(decrease) in defaults that will result in additional breaches			(5.8	)		18.4		34.0		82.1
Results of Bank of America Agreement			95.6			—		429.7		—
Accretion of discount on balance			1.1			2.0		1.7		2.1
	Total	$	90.9		$	55.9	$	770.9	$	211.9

Loss and LAE Reserve, Net of Reinsurance and Salvage and Subrogation Recoverable

				As of June 30, 2011									As of December 31, 2010
				Loss and LAE Reserve(1)			Salvage and Subrogation Recoverable(2)			Net			Loss and LAE Reserve(1)			Salvage and Subrogation Recoverable(2)			Net
				(in millions)
U.S. RMBS:
	First lien:
		Prime first lien		$	2.5		$	—		$	2.5		$	1.2		$	—			1.2
		Alt-A first lien			46.5			5.5			41.0			39.2			2.6			36.6
		Option ARM			136.1			106.3			29.8			223.3			63.0			160.3
		Subprime			87.4			0.1			87.3			108.3			0.1			108.2
			Total first lien		272.5			111.9			160.6			372.0			65.7			306.3
	Second lien:
		Closed-end second lien			9.3			129.6			(120.3	)		7.7			50.3			(42.6	)
		HELOC			59.8			182.9			(123.1	)		7.1			843.4			(836.3	)
			Total second lien		69.1			312.5			(243.4	)		14.8			893.7			(878.9	)
Total U.S. RMBS					341.6			424.4			(82.8	)		386.8			959.4			(572.6	)
Other structured finance					149.2			2.5			146.7			119.7			1.4			118.3
Public finance					64.0			37.9			26.1			81.6			34.4			47.2
Total financial guaranty					554.8			464.8			90.0			588.1			995.2			(407.1	)
Other					2.1			—			2.1			2.1			—			2.1
		Subtotal			556.9			464.8			92.1			590.2			995.2			(405.0	)
Effect of consolidating FG VIEs					(64.8	)		(192.9	)		128.1			(49.5	)		(92.2	)		42.7
		Total(1)		$	492.1		$	271.9		$	220.2		$	540.7		$	903.0		$	(362.3	)

(1)

The June 30, 2011 loss and LAE consists of $518.1 million loss and LAE reserve net of $26.0 million of reinsurance recoverable on unpaid losses. The December 31, 2010 loss and LAE consists of $563.0 million loss and LAE reserve net of $22.3 million of reinsurance recoverable on unpaid losses.

(2)

Salvage and subrogation recoverable is net of $35.2 million and $129.4 million in ceded salvage and subrogation recorded in "reinsurance balances payable" at June 30, 2011 and December 31, 2010, respectively.

Loss and LAE Reported on the Consolidated Statements of Operations

					Second Quarter						Six Months
					2011			2010			2011			2010
					(in millions)
Financial Guaranty:
	U.S. RMBS:
		First lien:
			Prime first lien		$	1.2		$	(0.1	)	$	1.1		$	—
			Alt-A first lien			19.2			8.1			27.4			13.5
			Option ARM			70.4			56.6			41.3			101.0
			Subprime			4.3			16.3			(5.1	)		41.0
				Total first lien		95.1			80.9			64.7			155.5
		Second lien:
			Closed-end second lien			(5.7	)		(11.5	)		(15.6	)		(7.1	)
			HELOC			36.2			11.2			97.2			34.8
				Total second lien		30.5			(0.3	)		81.6			27.7
	Total U.S. RMBS					125.6			80.6			146.3			183.2
	Other structured finance					22.8			31.6			42.8			41.8
	Public finance					4.1			(16.8	)		(11.7	)		10.9
Total financial guaranty						152.5			95.4			177.4			235.9
Other						—			0.1			—			0.1
		Subtotal				152.5			95.5			177.4			236.0
Effect of consolidating FG VIEs						(19.6	)		(24.3	)		(71.5	)		(34.3	)
		Total loss and LAE (recoveries)			$	132.9		$	71.2		$	105.9		$	201.7

Net Losses Paid on Financial Guaranty Insurance Contracts

					Second Quarter						Six Months
					2011			2010			2011			2010
					(in millions)
Financial Guaranty:
	U.S. RMBS:
		First lien:
			Prime first lien		$	—		$	—		$	—		$	—
			Alt-A first lien			19.1			15.0			38.6			29.0
			Option ARM			81.5			32.7			168.4			49.1
			Subprime			0.6			1.4			15.7			2.3
				Total first lien		101.2			49.1			222.7			80.4
		Second lien:
			Closed-end second lien			14.6			19.4			41.7			39.9
			HELOC			(727.3	)		166.8			(662.7	)		315.8
				Total second lien		(712.7	)		186.2			(621.0	)		355.7
	Total U.S. RMBS					(611.5	)		235.3			(398.3	)		436.1
	Other structured finance					0.6			1.9			3.0			5.6
	Public finance					0.2			9.8			9.2			34.2
Total financial guaranty						(610.7	)		247.0			(386.1	)		475.9
Other						—			—			—			—
		Subtotal				(610.7	)		247.0			(386.1	)		475.9
Effect of consolidating FG VIEs						46.0			(41.0	)		(12.2	)		(58.9	)
		Total			$	(564.7	)	$	206.0		$	(398.3	)	$	417.0

(1)

Includes the effect of loss mitigation efforts and cessions not yet settled.

Financial Guaranty Insurance BIG Transaction Loss Summary

Financial Guaranty Insurance BIG Transaction Loss Summary
June 30, 2011

			BIG Categories
			BIG 1						BIG 2					BIG 3
																				Total BIG, Net(1)		Effect of Consolidating VIEs
			Gross			Ceded			Gross		Ceded			Gross			Ceded								Total
			(dollars in millions)
Number of risks(2)				151			(60	)		84		(29	)		129			(51	)		364		—			364
Remaining weighted average contract period (in years)				11.5			14.8			9.3		7.1			8.7			6.0			9.8		—			9.8
Net outstanding exposure:
	Principal		$	7,724.4		$	(847.4	)	$	5,245.6	$	(207.5	)	$	8,102.6		$	(678.4	)	$	19,339.3	$	—		$	19,339.3
	Interest			4,074.5			(655.8	)		2,566.7		(70.4	)		2,343.8			(178.3	)		8,080.5		—			8,080.5
		Total	$	11,798.9		$	(1,503.2	)	$	7,812.3	$	(277.9	)	$	10,446.4		$	(856.7	)	$	27,419.8	$	—		$	27,419.8
Expected cash flows			$	228.5		$	(8.4	)	$	1,548.4	$	(85.8	)	$	2,715.3		$	(144.3	)	$	4,253.7	$	(593.8	)	$	3,659.9
Less:
	Potential recoveries(3)			378.2			(26.9	)		633.7		(23.4	)		2,229.6			(103.8	)		3,087.4		(588.2	)		2,499.2
	Discount			(42.3	)		1.1			441.9		(38.3	)		83.1			7.8			453.3		(11.2	)		442.1
Present value of expected cash flows			$	(107.4	)	$	17.4		$	472.8	$	(24.1	)	$	402.6		$	(48.3	)	$	713.0	$	5.6		$	718.6
Deferred premium revenue			$	141.8		$	(14.4	)	$	357.7	$	(23.4	)	$	1,084.6		$	(129.9	)	$	1,416.4	$	(420.9	)	$	995.5
Reserves (salvage)(4)			$	(115.9	)	$	17.9		$	281.4	$	(14.6	)	$	(86.3	)	$	7.5		$	90.0	$	128.1		$	218.1

Financial Guaranty Insurance BIG Transaction Loss Summary
December 31, 2010

			BIG Categories
			BIG 1						BIG 2					BIG 3
																				Total BIG, Net(1)			Effect of Consolidating VIEs
			Gross			Ceded			Gross		Ceded			Gross			Ceded									Total
			(dollars in millions)
Number of risks(2)				120			(46	)		97		(41	)		115			(42	)		332			—			332
Remaining weighted average contract period (in years)				11.7			15.9			8.5		8.0			8.8			6.0			9.6			—			9.6
Net outstanding exposure:
	Principal		$	6,246.5		$	(726.0	)	$	5,825.8	$	(180.1	)	$	7,954.5		$	(673.6	)	$	18,447.1		$	—		$	18,447.1
	Interest			3,622.7			(581.3	)		2,578.5		(70.1	)		2,490.7			(186.3	)		7,854.2			—			7,854.2
		Total	$	9,869.2		$	(1,307.3	)	$	8,404.3	$	(250.2	)	$	10,445.2		$	(859.9	)	$	26,301.3		$	—		$	26,301.3
Expected cash flows			$	303.9		$	(20.2	)	$	2,019.8	$	(68.9	)	$	2,256.6		$	(133.2	)	$	4,358.0		$	(384.2	)	$	3,973.8
Less:
	Potential recoveries(3)			375.2			(37.4	)		533.0		(16.6	)		2,543.6			(197.5	)		3,200.3			(354.8	)		2,845.5
	Discount			21.0			5.5			610.4		(21.5	)		139.6			7.9			762.9			19.8			782.7
Present value of expected cash flows			$	(92.3	)	$	11.7		$	876.4	$	(30.8	)	$	(426.6	)	$	56.4		$	394.8		$	(49.2	)	$	345.6
Deferred premium revenue			$	169.9		$	(16.9	)	$	569.8	$	(30.3	)	$	995.9		$	(120.7	)	$	1,567.7		$	(263.9	)	$	1,303.8
Reserves (salvage)(4)			$	(112.9	)	$	12.4		$	413.0	$	(9.5	)	$	(815.9	)	$	105.8		$	(407.1	)	$	42.7		$	(364.4	)

(1)

Includes BIG amounts relating to FG VIEs.

(2)

A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments.

(3)

Includes estimated future recoveries for breaches of R&W as well as excess spread, and draws on HELOCs.

(4)

See table "Components of net reserves (salvage)".

Components of Net Reserves (Salvage)

		June 30, 2011			December 31, 2010
		(in millions)
Loss and LAE reserve		$	518.1		$	563.0
Reinsurance recoverable on unpaid losses			(26.0	)		(22.3	)
Salvage and subrogation recoverable			(307.1	)		(1,032.4	)
Salvage and subrogation payable(1)			35.2			129.4
	Total		220.2			(362.3	)
Less: other			2.1			2.1
Financial guaranty reserves, net of salvage and subrogation		$	218.1		$	(364.4	)

(1)

Recorded as a component of reinsurance balances payable.