The Company's financial guaranty contracts are written in different forms, but collectively are considered financial guaranty contracts. They typically guarantee the scheduled payments of principal and interest ("Debt Service") on public finance and structured finance obligations. The Company seeks to limit its exposure to losses by underwriting obligations that are investment grade at inception, diversifying its portfolio and maintaining rigorous subordination or collateralization requirements on structured finance obligations. The Company also has utilized reinsurance by ceding business to third-party reinsurers. The Company provides financial guaranties with respect to debt obligations of special purpose entities, including VIEs. Based on accounting standards in effect during any given reporting period, some of these VIEs are consolidated as described in Note 8, Consolidation of Variable Interest Entities. The outstanding par and Debt Service amounts presented below include outstanding exposures on VIEs whether or not they are consolidated.

	Gross Par Outstanding				Ceded Par Outstanding				Net Par Outstanding

Sector	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
	(in millions)
Public finance:
U.S.:
General obligation	$	187,857	$	198,553	$	14,796	$	16,754	$	173,061	$	181,799
Tax backed		85,866		92,246		7,860		8,843		78,006		83,403
Municipal utilities		69,803		75,588		4,599		5,522		65,204		70,066
Transportation		40,409		42,482		5,013		5,509		35,396		36,973
Healthcare		23,540		26,383		4,045		4,791		19,495		21,592
Higher education		16,535		16,584		858		897		15,677		15,687
Housing		6,363		7,316		667		754		5,696		6,562
Infrastructure finance		4,983		4,945		873		853		4,110		4,092
Investor-owned utilities		1,125		1,507		1		2		1,124		1,505
Other public finance—U.S.		5,380		5,417		76		100		5,304		5,317

Total public finance—U.S.		441,861		471,021		38,788		44,025		403,073		426,996
Non-U.S.:
Infrastructure finance		18,231		18,780		2,826		2,807		15,405		15,973
Regulated utilities		17,639		18,427		4,379		4,449		13,260		13,978
Pooled infrastructure		3,351		3,656		221		224		3,130		3,432
Other public finance—non-U.S.		9,183		9,582		1,932		2,222		7,251		7,360

Total public finance—non-U.S.		48,404		50,445		9,358		9,702		39,046		40,743

Total public finance obligations	$	490,265	$	521,466	$	48,146	$	53,727	$	442,119	$	467,739

Structured finance:
U.S.:
Pooled corporate obligations	$	54,585	$	71,591	$	3,065	$	4,207	$	51,520	$	67,384
RMBS		22,842		26,609		1,275		1,479		21,567		25,130
Financial products(1)		5,217		6,831		—		—		5,217		6,831
Commercial Mortgage-Backed Securities ("CMBS") and other commercial real estate related exposures		4,827		7,137		53		53		4,774		7,084
Consumer receivables		4,489		6,343		163		270		4,326		6,073
Insurance securitizations		1,966		1,656		73		72		1,893		1,584
Commercial receivables		1,222		2,142		8		3		1,214		2,139
Structured credit		489		1,794		65		65		424		1,729
Other structured finance—U.S.		2,453		1,980		1,154		1,178		1,299		802

Total structured finance—U.S.		98,090		126,083		5,856		7,327		92,234		118,756
Non-U.S.:
Pooled corporate obligations		19,670		25,087		1,939		2,477		17,731		22,610
Commercial receivables		1,893		1,764		28		35		1,865		1,729
RMBS		1,765		3,749		167		355		1,598		3,394
Structured credit		1,097		1,397		118		130		979		1,267
Insurance securitizations		979		979		15		15		964		964
CMBS and other commercial real estate related exposures		180		251		—		—		180		251
Other structured finance—non-U.S.		403		472		25		51		378		421

Total structured finance—non-U.S.		25,987		33,699		2,292		3,063		23,695		30,636

Total structured finance obligations	$	124,077	$	159,782	$	8,148	$	10,390	$	115,929	$	149,392

Total	$	614,342	$	681,248	$	56,294	$	64,117	$	558,048	$	617,131

As of December 31, 2011, the Company's net mortgage guaranty insurance in force was approximately $171.6 million. Of the $171.6 million, $136.1 million covers loans originated in Ireland and $35.5 million covers loans originated in the UK.

	As of December 31, 2011

	Public Finance U.S.					Public Finance Non-U.S.					Structured Finance U.S					Structured Finance Non-U.S					Total
Rating Category	Net Par Outstanding		%			Net Par Outstanding		%			Net Par Outstanding		%			Net Par Outstanding		%			Net Par Outstanding		%
	(dollars in millions)
Super senior	$	—		—	%	$	1,138		2.9	%	$	16,756		18.2	%	$	5,660		23.9	%	$	23,554		4.2	%
AAA		5,074		1.3			1,381		3.5			35,736		38.7			10,231		43.2			52,422		9.4
AA		139,693		34.6			1,056		2.7			11,079		12.0			976		4.1			152,804		27.4
A		213,164		52.9			11,744		30.1			4,116		4.5			1,518		6.4			230,542		41.3
BBB		40,635		10.1			21,399		54.8			5,087		5.5			3,391		14.3			70,512		12.6
BIG		4,507		1.1			2,328		6.0			19,460		21.1			1,919		8.1			28,214		5.1

Total net par outstanding	$	403,073		100.0	%	$	39,046		100.0	%	$	92,234		100.0	%	$	23,695		100.0	%	$	558,048		100.0	%

	As of December 31, 2010

	Public Finance U.S.					Public Finance Non-U.S.					Structured Finance U.S					Structured Finance Non-U.S					Total
Rating Category	Net Par Outstanding		%			Net Par Outstanding		%			Net Par Outstanding		%			Net Par Outstanding		%			Net Par Outstanding		%
	(dollars in millions)
Super senior	$	—		—	%	$	1,420		3.5	%	$	21,837		18.4	%	$	7,882		25.7	%	$	31,139		5.0	%
AAA		5,784		1.4			1,378		3.4			45,067		37.9			13,573		44.3			65,802		10.7
AA		161,906		37.9			1,330		3.3			17,355		14.6			1,969		6.4			182,560		29.6
A		214,199		50.2			12,482		30.6			6,396		5.4			1,873		6.1			234,950		38.1
BBB		41,948		9.8			22,338		54.8			7,543		6.4			4,045		13.2			75,874		12.3
BIG		3,159		0.7			1,795		4.4			20,558		17.3			1,294		4.3			26,806		4.3

Total net par outstanding	$	426,996		100.0	%	$	40,743		100.0	%	$	118,756		100.0	%	$	30,636		100.0	%	$	617,131		100.0	%

Actual maturities of insured obligations could differ from contractual maturities because borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties. The expected maturities of structured finance obligations are, in general, considerably shorter than the contractual maturities for such obligations. For structured finance obligations, the full par outstanding for each insured risk is shown in the maturity category that corresponds to the final legal maturity of such risk.

Contractual Terms to Maturity of
Net Par Outstanding of Financial Guaranty Insured Obligations

In addition to amounts shown in the tables above, the Company had outstanding commitments to provide guaranties of $2.8 billion for structured finance and $1.3 billion for public finance obligations at December 31, 2011. The structured finance commitments include the unfunded component of pooled corporate and other transactions. Public finance commitments typically relate to primary and secondary public finance debt issuances. The expiration dates for the public finance commitments range between January 1, 2012 and February 25, 2017, with $1.0 billion expiring prior to December 31, 2012. All the commitments are contingent on the satisfaction of all conditions set forth in them and may expire unused or be cancelled at the counterparty's request. Therefore, the total commitment amount does not necessarily reflect actual future guaranteed amounts.

The Company seeks to maintain a diversified portfolio of insured obligations designed to spread its risk across a number of geographic areas. The following table sets forth those geographic areas with an aggregate of 2% or more of the Company's net par amount outstanding.

	Number of Risks		Net Par Amount Outstanding				Ceded Par Amount Outstanding

	(dollars in millions)
U.S.:
U.S. Public finance:
California		1,592	$	57,815	10.4	%	$	6,206
New York		1,062		33,268	6.0			4,416
Pennsylvania		1,173		30,656	5.5			1,837
Texas		1,290		29,922	5.4			1,524
Florida		471		25,664	4.6			1,794
Illinois		1,020		25,645	4.6			3,293
New Jersey		764		17,071	3.1			3,034
Michigan		775		15,832	2.8			1,094
Massachusetts		315		11,390	2.0			2,187
Other states		5,906		155,810	27.9			13,403

Total U.S. Public finance		14,368		403,073	72.3			38,788
Structured finance (multiple states)		1,162		92,234	16.5			5,856

Total U.S.		15,530		495,307	88.8			44,644
Non-U.S.:
United Kingdom		125		24,202	4.3			5,610
Australia		37		8,356	1.5			1,405
Canada		13		4,186	0.8			552
France		23		4,056	0.7			1,136
Italy		12		2,396	0.4			478
Other		126		19,545	3.5			2,469

Total non-U.S.		336		62,741	11.2			11,650

Total		15,866	$	558,048	100.0	%	$	56,294

Several European countries are experiencing significant economic, fiscal and / or political strains such that the likelihood of default on obligations with a nexus to those countries may be higher than the Company anticipated when such factors did not exist. The Company is closely monitoring its exposures in European countries where it believes heightened uncertainties exist: specifically the Selected European Countries. Published reports have identified countries that may be experiencing reduced demand for their sovereign debt in the current environment. The Company selected these European countries based on these reports and its view that their credit fundamentals are deteriorating. The Company's economic exposure to the Selected European Countries (based on par for financial guaranty contracts and notional amount for financial guaranty contracts accounted for as derivatives) is shown in the following table net of ceded reinsurance:

	Greece		Hungary		Ireland		Italy		Portugal		Spain		Total

	(in millions)
Sovereign and sub-sovereign exposure:
Public finance	$	282	$	—	$	—	$	1,011	$	113	$	264	$	1,670
Infrastructure finance		—		453		24		332		102		169		1,080

Sub-total		282		453		24		1,343		215		433		2,750

Non-sovereign exposure:
Regulated utilities		—		—		—		220		—		20		240
RMBS		—		257		136		516		—		—		909
Commercial receivables		—		1		28		29		15		23		96
Pooled corporate		34		—		241		289		25		550		1,139

Sub-total		34		258		405		1,054		40		593		2,384

Total	$	316	$	711	$	429	$	2,397	$	255	$	1,026	$	5,134

Total BIG	$	282	$	414	$	15	$	245	$	130	$	141	$	1,227

The Risk Oversight and Audit Committees of the Board of Directors of AGL oversee the Company's risk management policies and procedures. With input from the board committees, specific risk policies and limits are set by the Portfolio Risk Management Committee, which includes members of senior management and senior Credit and Surveillance officers. The Company's Risk Management function encompasses enterprise risk management, establishing the Company's risk appetite, credit underwriting of new business, surveillance and work-out.

Surveillance personnel are responsible for monitoring and reporting on all transactions in the insured portfolio.

The primary objective of the surveillance process is to monitor trends and changes in transaction credit quality, detect any deterioration in credit quality, and recommend to management such remedial actions as may be necessary or appropriate. All transactions in the insured portfolio are assigned internal credit ratings, and Surveillance personnel are responsible for recommending adjustments to those ratings to reflect changes in transaction credit quality.

Work-out personnel are responsible for managing work-out and loss mitigation situations, working with surveillance and legal personnel (as well as outside vendors) as appropriate. They develop strategies for the Company to enforce its contractual rights and remedies and to mitigate its losses, engage in negotiation discussions with transaction participants and, when necessary, manage (along with legal personnel) the Company's litigation proceedings.

Since the onset of the financial crisis, the Company has shifted personnel to loss mitigation and work-out activities and hired new personnel to augment its efforts. Although the Company's loss mitigation efforts may extend to any transaction it has identified as having loss potential, much of the activity has been focused on RMBS.

Generally, when mortgage loans are transferred into a securitization, the loan originator(s) and/or sponsor(s) provide R&W, that the loans meet certain characteristics, and a breach of such R&W often requires that the loan be repurchased from the securitization. In many of the transactions the Company insures, it is in a position to enforce these requirements. The Company uses internal resources as well as third party forensic underwriting firms and legal firms to pursue breaches of R&W. If a provider of R&W refuses to honor its repurchase obligations, the Company may choose to initiate litigation. See "—Recovery Litigation" in Note 5, Financial Guaranty Insurance Contracts, below.

The Company's success in pursuing R&W claims against a number of counterparties that provided R&W on a loan by loan basis has permitted the Company to pursue reimbursement agreements with R&W providers. Such agreements provide the Company with many of the benefits of pursuing the R&W claims but without the expense and uncertainty of pursuing the R&W claims on a loan by loan basis. In April 2011 the Company entered into such an agreement with Bank of America, and it continues to pursue such agreements with other counterparties as opportunities arise as described under "Bank of America Agreement" in Note 2, Business Changes, Risks, Uncertainties and Accounting Developments.

The quality of servicing of the mortgage loans underlying an RMBS transaction influences collateral performance and ultimately the amount (if any) of the Company's insured losses. The Company has established a group to mitigate RMBS losses by influencing mortgage servicing, including, if possible, causing the transfer of servicing or establishing special servicing. As a result of the Company's efforts, at December 31, 2011 the servicing of approximately $934 million mortgage balance of mortgage loans had been transferred to a new servicer and another $2.3 billion mortgage balance of mortgage loans were being special serviced. ("Special servicing" is an industry term referencing more intense servicing applied to delinquent loans aimed at mitigating losses.)

The Company may also employ other strategies as appropriate to avoid or mitigate losses in U.S. RMBS or other areas, including pursuing litigation in areas other than RMBS or entering into other arrangements to alleviate or reduce all or a portion of certain risks.

The Company segregates its insured portfolio into investment grade and BIG surveillance categories to facilitate the appropriate allocation of resources to monitoring and loss mitigation efforts and to aid in establishing the appropriate cycle for periodic review for each exposure. BIG exposures include all exposures with internal credit ratings below BBB-. The Company's internal credit ratings are based on internal assessments of the likelihood of default and loss severity in the event of default. Internal credit ratings are expressed on a ratings scale similar to that used by the rating agencies and are generally reflective of an approach similar to that employed by the rating agencies.

The Company monitors its investment grade credits to determine whether any new credits need to be internally downgraded to BIG. The Company refreshes its internal credit ratings on individual credits in quarterly, semi-annual or annual cycles based on the Company's view of the credit's quality, loss potential, volatility and sector. Ratings on credits in sectors identified as under the most stress or with the most potential volatility are reviewed every quarter. The Company's insured credit ratings on assumed credits are based on the Company's reviews of low-rated credits or credits in volatile sectors, unless such information is not available, in which case, the ceding company's credit rating of the transactions are used. For example, the Company models all assumed RMBS credits with par above $1 million, as well as certain RMBS credits below that amount.

Credits identified as BIG are subjected to further review to determine the probability of a loss (see Note 5, Financial Guaranty Insurance Contracts, "—Loss Estimation Process"). Surveillance personnel then assign each BIG transaction to the appropriate BIG surveillance category based upon whether a lifetime loss is expected and whether a claim has been paid. The Company expects "lifetime losses" on a transaction when the Company believes there is more than a 50% chance that, on a present value basis, it will pay more claims over the life of that transaction than it will ultimately have been reimbursed. For surveillance purposes, the Company calculates present value using a constant discount rate of 5%. (A risk free rate is used for recording of reserves for financial statement purposes.) A "liquidity claim" is a claim that the Company expects to be reimbursed within one year.

Intense monitoring and intervention is employed for all BIG surveillance categories, with internal credit ratings reviewed quarterly. The three BIG categories are:

Included in the first lien RMBS BIG exposures below is $1.8 billion of net par outstanding related to transactions covered by the Bank of America Agreement, which represents 18% of the first lien U.S. RMBS BIG net par outstanding as of December 31, 2011. Under the Bank of America Agreement, 80% of first lien claims paid by Assured Guaranty will be reimbursed, until such time as losses on the collateral underlying the RMBS on which Assured Guaranty is paying claims reach $6.6 billion.

	December 31, 2011

	BIG Net Par Outstanding
	BIG Net Par Outstanding								Net Par Outstanding		BIG Net Par as a % of Net Par Outstanding
	BIG 1		BIG 2		BIG 3		Total BIG		Net Par Outstanding		BIG Net Par as a % of Net Par Outstanding
	(in millions)
First lien U.S. RMBS:
Prime first lien	$	77	$	499	$	—	$	576	$	739		0.1	%
Alt-A first lien		1,720		1,395		1,540		4,655		5,329		0.8
Option ARM		120		1,088		995		2,203		2,433		0.4
Subprime (including net interest margin securities)		1,000		1,414		513		2,927		8,136		0.5
Second lien U.S. RMBS:
Closed end second lien		—		495		520		1,015		1,040		0.2
Home equity lines of credit ("HELOCs")		421		—		2,858		3,279		3,890		0.6

Total U.S. RMBS		3,338		4,891		6,426		14,655		21,567		2.6
Trust preferred securities ("TruPS")		2,501		—		951		3,452		6,334		0.6
Other structured finance		1,295		548		1,429		3,272		88,028		0.6
Public finance		5,441		556		838		6,835		442,119		1.3

Total	$	12,575	$	5,995	$	9,644	$	28,214	$	558,048		5.1	%

	December 31, 2010

	BIG Net Par Outstanding
	BIG Net Par Outstanding								Net Par Outstanding		BIG Net Par as a % of Net Par Outstanding
	BIG 1		BIG 2		BIG 3		Total BIG		Net Par Outstanding		BIG Net Par as a % of Net Par Outstanding
	(in millions)
First lien U.S. RMBS:
Prime first lien	$	82	$	542	$	—	$	624	$	849		0.1	%
Alt-A first lien		976		3,108		573		4,657		6,134		0.8
Option ARM		33		2,186		640		2,859		3,214		0.5
Subprime (including net interest margin securities)		729		2,248		106		3,083		9,039		0.4
Second lien U.S. RMBS:
Closed end second lien		63		444		624		1,131		1,164		0.2
HELOCs		369		—		3,632		4,001		4,730		0.6

Total U.S. RMBS		2,252		8,528		5,575		16,355		25,130		2.6
TruPS		1,846		—		964		2,810		6,833		0.5
Other structured finance		841		363		1,483		2,687		117,429		0.4
Public finance		3,752		283		919		4,954		467,739		0.8

Total	$	8,691	$	9,174	$	8,941	$	26,806	$	617,131		4.3	%