Earnings Per Share

12 Months Ended

Dec. 31, 2011

Earnings Per Share

Earnings Per Share

18. Earnings Per Share

Accounting Policy

        The Company computes EPS using a two-class method by including participating securities which entitle their holders to receive nonforfeitable dividends or dividend equivalents before vesting. Restricted stock awards and share units under the AGC SERP plan are considered participating securities as they received non-forfeitable rights to dividends at the same rate as common stock.

        The two-class method of computing EPS is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic EPS is then calculated by dividing net (loss) income available to common shareholders of Assured Guaranty by the weighted-average number of common shares outstanding during the period. Diluted EPS adjusts basic EPS for the effects of restricted stock, stock options, equity units and other potentially dilutive financial instruments ("dilutive securities"), only in the periods in which such effect is dilutive. The effect of the dilutive securities is reflected in diluted EPS by application of the more dilutive of (1) the treasury stock method or (2) the two-class method assuming nonvested shares are not converted into common shares. With respect to the equity units (see Note 15, Long-Term Debt and Credit Facilities), in computing diluted EPS, the treasury stock method is used. Basic EPS will not be affected until the equity forwards are satisfied and the holders thereof become common stock holders. The Company has a single class of common stock.

Computation of EPS

	Year Ended December 31,
	2011		2010		2009
	(in millions, except per share amounts)
Basic EPS:
Net income (loss) attributable to AGL	$	775.6	$	493.7	$	86.0
Less: Distributed and undistributed income (loss) available to nonvested shareholders		0.5		0.9		0.3
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries	$	775.1	$	492.8	$	85.7
Basic shares		183.4		184.0		126.5
Basic EPS	$	4.23	$	2.68	$	0.68
Diluted EPS:
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries	$	775.1	$	492.8	$	85.7
Plus: Re-allocation of undistributed income (loss) available to nonvested shareholders of AGL and subsidiaries		—		—		—
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries	$	775.1	$	492.8	$	85.7
Basic shares		183.4		184.0		126.5
Effect of dilutive securities:
Options and restricted stock awards		0.9		0.9		0.6
Equity units		1.2		4.0		2.0
Diluted shares		185.5		188.9		129.1
Diluted EPS	$	4.18	$	2.61	$	0.66
Potentially dilutive securities excluded from computation of EPS because of antidilutive effect		7.2		3.0		4.4