The Company's business includes two principal segments: financial guaranty direct and financial guaranty reinsurance. The financial guaranty direct segment includes policies issued directly to the holders of insured obligations at time of issuance and those issued in the secondary market. The financial guaranty reinsurance segment includes assumed reinsurance contracts written to third parties. The Company's mortgage guaranty insurance business, which was previously as a separate segment and has had no new activity in recent years, and other lines of business that were 100% ceded upon Assured Guaranty's IPO in 2004, are shown as "other." Each segment is reported net of business ceded to external reinsurers. The financial guaranty segments include contracts accounted for as both insurance and credit derivatives. Financial guaranties of RMBS and CMBS are included in both the financial guaranty direct and reinsurance segments.

Prior to the AGMH Acquisition, AG Re assumed business from AGM and it continues to do so. For periods prior to the AGMH Acquisition, the Company reported the business assumed from AGMH in the financial guaranty reinsurance segment, reflecting the separate organizational structures as of those reporting dates. As a result, prior period segment results are consistent with the amounts previously reported by segment. For periods subsequent to the AGMH Acquisition, the Company included all financial guaranty business written by AGMH in the financial guaranty direct segment and the AGMH business assumed by AG Re is eliminated from the financial guaranty reinsurance segment.

The Other segment includes mortgage guaranty insurance whereby the Company provides protection against the default of borrowers on mortgage loans, and lines of business (including equity layer credit protection, trade credit reinsurance, title reinsurance and auto residual value reinsurance) in which the Company is no longer active.

The Company does not segregate assets and liabilities at a segment level since management reviews and controls these assets and liabilities on a consolidated basis. The Company allocates operating expenses to each segment based on a comprehensive cost study and is based on departmental time estimates and headcount.

The Company manages its business without regard to accounting requirements to consolidate certain VIEs. As a result, underwriting gain or loss includes results of operations as if consolidated VIEs were accounted for as insurance.

Management uses underwriting gains and losses as the primary measure of each segment's financial performance. Underwriting gain is the measure used by management to measure and analyze the insurance operations of the Company calculated as pre-tax income excluding net investment income, realized investment gains and losses, non-credit impairment related unrealized gains and losses on credit derivatives, fair value gain (loss) on CCS, goodwill and settlement of pre-existing relationship, AGMH acquisition-related expenses, interest expense, and certain other expenses, which are not directly related to the underwriting performance of the Company's insurance operations but are included in net income.

The following table summarizes the components of underwriting gain (loss) for each reporting segment:

	Year Ended December 31, 2010

	Financial Guaranty Direct			Financial Guaranty Reinsurance			Other			Underwriting Gain (Loss)			Consolidation of VIEs			Total
	(in millions)
	(restated)									(restated)			(restated)			(restated)
Net earned premiums	$	1,161.7		$	70.2		$	2.4		$	1,234.3		$	(47.6	)	$	1,186.7
Credit derivative revenues(1)		210.9			(0.6	)		—			210.3			—			210.3
Other income		60.5			—			—			60.5			—			60.5
Loss and loss adjustment (expenses) recoveries		(402.2	)		(75.7	)		(0.2	)		(478.1	)		65.9			(412.2	)
Losses incurred on credit derivatives		(200.5	)		(8.9	)		—			(209.4	)		—			(209.4	)
Amortization of deferred acquisition costs		(16.6	)		(17.4	)		(0.1	)		(34.1	)		—			(34.1	)
Other operating expenses		(171.3	)		(29.2	)		(1.3	)		(201.8	)		—			(201.8	)

Underwriting gain (loss)	$	642.5		$	(61.6	)	$	0.8		$	581.7

	Year Ended December 31, 2009

	Financial Guaranty Direct			Financial Guaranty Reinsurance			Other			Total
	(in millions)
	(restated)									(restated)
Net earned premiums	$	793.1		$	134.4		$	2.9		$	930.4
Credit derivative revenues(1)		168.2			2.0			—			170.2
Other income		31.3			0.1			—			31.4
Loss and loss adjustment (expenses) recoveries		(257.9	)		(123.8	)		(12.1	)		(393.8	)
Losses incurred on credit derivatives		(238.1	)		(0.6	)		—			(238.7	)
Amortization of deferred acquisition costs		(16.3	)		(37.1	)		(0.5	)		(53.9	)
Other operating expenses		(136.4	)		(26.4	)		(3.0	)		(165.8	)

Underwriting gain (loss)	$	343.9		$	(51.4	)	$	(12.7	)	$	279.8

	Year Ended December 31, 2008

	Financial Guaranty Direct			Financial Guaranty Reinsurance			Other			Total
	(in millions)
Net earned premiums	$	90.0		$	165.7		$	5.7		$	261.4
Credit derivative revenues(1)		113.8			3.4			—			117.2
Other income		0.5			0.2			—			0.7
Loss and loss adjustment (expenses) recoveries		(196.9	)		(68.4	)		(0.5	)		(265.8	)
Losses incurred on credit derivatives		(38.3	)		(5.4	)		0.4			(43.3	)
Amortization of deferred acquisition costs		(14.1	)		(46.6	)		(0.5	)		(61.2	)
Other operating expenses		(61.6	)		(20.7	)		(2.6	)		(84.9	)

Underwriting gain (loss)	$	(106.6	)	$	28.2		$	2.5		$	(75.9	)

	Year Ended December 31,

	2010			2009			2008
	(in millions)
	(restated)			(restated)
Total underwriting gain	$	581.7		$	279.8		$	(75.9	)
Net investment income		354.7			259.2			162.6
Net realized investment gains (losses)		(2.0	)		(32.7	)		(69.8	)
Unrealized gains on credit derivatives, excluding losses incurred on credit derivatives		(2.5	)		(105.7	)		81.7
Fair value gain (loss) on CCS		9.2			(122.9	)		42.7
Net change in financial guaranty VIEs		(273.6	)		(1.2	)		—
Other income(1)		(20.4	)		27.1			—
AGMH acquisition-related expenses		(6.8	)		(92.3	)		—
Interest expense		(99.6	)		(62.8	)		(23.3	)
Goodwill and settlement of intercompany relationship		—			(23.3	)		—
CCS premium expense(2)		(9.7	)		(8.3	)		(5.7	)
Elimination of insurance accounts for VIEs		18.3			—			—

Income (loss) before provision for income taxes	$	549.3		$	116.9		$	112.3

The following table provides the source from which each of the Company's segments derives their net earned premiums:

			Year Ended December 31,

			2010			2009		2008
			(in millions)
Financial guaranty direct:
	Public finance		$	437.4		$	328.0	$	34.6
	Structured finance			724.3			465.0		55.4

		Total		1,161.7			793.0		90.0
Financial guaranty reinsurance:
	Public finance			39.0			92.8		123.1
	Structured finance			31.2			41.6		42.6

		Total		70.2			134.4		165.7
Other				2.4			3.0		5.7

Subtotal				1,234.3			930.4		261.4
Consolidation of VIEs				(47.6	)		—		—

Total net earned premiums				1,186.7			930.4		261.4
Net credit derivative premiums received and receivable				206.8			168.1		118.1

	Total net earned premiums and credit derivative premiums received and receivable		$	1,393.5		$	1,098.5	$	379.5

The following table presents DAC, unearned premium reserves and loss and LAE reserves by segment as of December 31, 2010 and 2009.

		As of December 31,

		2010						2009
		Deferred Acquisition Cost		Unearned Premium Reserves		Loss and LAE Reserves		Deferred Acquisition Cost		Unearned Premium Reserves		Loss and LAE Reserves
		(in millions)
						(restated)				(restated)		(restated)
Financial guaranty direct		$	133.7	$	6,518.7	$	429.8	$	96.3	$	7,740.5	$	198.2
Financial guaranty reinsurance			105.9		443.8		140.9		145.4		627.8		96.3
Other			0.2		10.4		3.7		0.3		12.7		5.2

	Total	$	239.8	$	6,972.9	$	574.4	$	242.0	$	8,381.0	$	299.7