Subsidiary Information

3 Months Ended

Mar. 31, 2011

Subsidiary Information

Subsidiary Information

16. Subsidiary Information

The following tables present the condensed consolidating financial information for AGMH and AGUS, which have issued publicly traded debt securities that are fully and unconditionally guaranteed by AGL as of March 31, 2011 and December 31, 2010 and for the three months ended March 31, 2011 and 2010.  This information for AGMH and AGUS presents its subsidiaries on the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF MARCH 31, 2011

(in millions)

(restated)

	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Assets
Total investment portfolio and cash	$	23.9	$	21.9		$	38.3		$	10,565.2	$	—		$	10,649.3
Investment in subsidiaries	3,815.2		3,114.6			2,590.2			2,642.4		(12,162.4		)	—
Premiums receivable, net of ceding commissions payable	—		—			—			1,256.0		(138.0		)	1,118.0
Ceded unearned premium reserve	—		—			—			1,833.9		(1,039.6		)	794.3
Deferred acquisition costs	—		—			—			339.2		(103.2		)	236.0
Reinsurance recoverable on unpaid losses	—		—			—			88.2		(69.6		)	18.6
Credit derivative assets	—		—			—			678.6		(59.3		)	619.3
Deferred tax asset, net	—		(0.7		)	(95.1		)	1,129.9		(2.4		)	1,031.7
Intercompany receivable	—		—			—			300.0		(300.0		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—			—			3,679.0		—			3,679.0
Other assets(1)	15.8		34.2			47.5			1,512.1		(171.1		)	1,438.5
Total assets	$	3,854.9	$	3,170.0		$	2,580.9		$	24,024.5	$	(14,045.6	)	$	19,584.7
Liabilities and shareholders’ equity
Unearned premium reserves	$	—	$	—		$	—		$	7,621.5	$	(984.3	)	$	6,637.2
Loss and LAE reserve	—		—			—			506.7		(87.1		)	419.6
Long-term debt	—		518.7			409.4			121.6		—			1,049.7
Intercompany payable	—		—			—			300.0		(300.0		)	—
Credit derivative liabilities	—		0.2			—			2,818.5		(59.4		)	2,759.3
Financial guaranty variable interest entities’ liabilities, at fair value	—		—			—			4,247.2		—			4,247.2
Other liabilities(2)	10.8		8.7			25.8			878.4		(296.1		)	627.6
Total liabilities	10.8		527.6			435.2			16,493.9		(1,726.9		)	15,740.6
Total shareholders’ equity	3,844.1		2,642.4			2,145.7			7,530.6		(12,318.7		)	3,844.1
Total liabilities and shareholders’ equity	$	3,854.9	$	3,170.0		$	2,580.9		$	24,024.5	$	(14,045.6	)	$	19,584.7

(1) Includes salvage and subrogation recoverable, current income tax receivable and other assets.

(2) Includes reinsurance balances payable, net and other liabilities.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2010

(in millions)

(restated)

	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Assets
Total investment portfolio and cash	$	22.5	$	15.7		$	45.7		$	10,765.4	$	—		$	10,849.3
Investment in subsidiaries	3,703.6		2,965.4			2,316.9			2,489.8		(11,475.7		)	—
Premiums receivable, net of ceding commissions payable	—		—			—			1,346.8		(179.2		)	1,167.6
Ceded unearned premium reserve	—		—			—			1,883.4		(1,061.6		)	821.8
Deferred acquisition costs	—		—			—			350.4		(110.6		)	239.8
Reinsurance recoverable on unpaid losses	—		—			—			93.1		(70.8		)	22.3
Credit derivative assets	—		—			—			672.7		(79.8		)	592.9
Deferred tax asset, net	—		(0.8		)	(95.8		)	1,355.3		0.4			1,259.1
Intercompany receivable	—		—			—			300.0		(300.0		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—			—			3,657.5		—			3,657.5
Other assets(1)	19.2		3.8			15.2			1,354.5		(161.1		)	1,231.6
Total assets	$	3,745.3	$	2,984.1		$	2,282.0		$	24,268.9	$	(13,438.4	)	$	19,841.9
Liabilities and shareholders’ equity
Unearned premium reserves	$	—	$	—		$	—		$	7,976.5	$	(1,003.6	)	$	6,972.9
Loss and LAE reserve	—		—			—			663.9		(89.5		)	574.4
Long-term debt	—		518.4			407.5			127.0		—			1,052.9
Intercompany payable	—		—			—			300.0		(300.0		)	—
Credit derivative liabilities	—		0.2			—			2,542.5		(79.9		)	2,462.8
Financial guaranty variable interest entities’ liabilities, at fair value	—		—			—			4,368.1		—			4,368.1
Other liabilities(2)	11.8		(24.3		)	(6.9		)	1,023.7		(327.0		)	677.3
Total liabilities	11.8		494.3			400.6			17,001.7		(1,800.0		)	16,108.4
Total shareholders’ equity	3,733.5		2,489.8			1,881.4			7,267.2		(11,638.4		)	3,733.5
Total liabilities and shareholders’ equity	$	3,745.3	$	2,984.1		$	2,282.0		$	24,268.9	$	(13,438.4	)	$	19,841.9

(1) Includes salvage and subrogation recoverable and other assets.

(2) Includes reinsurance balances payable, net, current income tax payable and other liabilities.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(in millions)

(restated)

	Assured Guaranty Ltd (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Revenues
Net earned premiums	$	—	$	—		$	—		$	251.4		$	2.6		$	254.0
Net investment income	—		—			0.2			99.6			(3.7		)	96.1
Net realized investment gains (losses)	—		—			—			2.8			—			2.8
Net change in fair value of credit derivatives:
Realized gains and other settlements	—		—			—			35.4			—			35.4
Net unrealized gains (losses)	—		—			—			(271.6		)	—			(271.6		)
Net change in fair value of credit derivatives	—		—			—			(236.2		)	—			(236.2		)
Equity in earnings of subsidiaries	149.0		176.9			293.3			170.4			(789.6		)	—
Other income(1)	—		—			—			163.4			(1.1		)	162.3
Total revenues	149.0		176.9			293.5			451.4			(791.8		)	279.0
Expenses
Loss and LAE	—		—			—			(26.8		)	1.3			(25.5		)
Amortization of deferred acquisition costs	—		—			—			14.8			(7.4		)	7.4
Interest expense	—		9.8			13.4			5.3			(3.7		)	24.8
Other operating expenses	8.4		0.2			0.5			49.1			(1.4		)	56.8
Total expenses	8.4		10.0			13.9			42.4			(11.2		)	63.5
Income (loss) before income taxes	140.6		166.9			279.6			409.0			(780.6		)	215.5
Total provision (benefit) for income taxes	—		(3.5		)	(4.8		)	80.4			2.8			74.9
Net income (loss)	$	140.6	$	170.4		$	284.4		$	328.6		$	(783.4	)	$	140.6

(1) Includes fair value gain (loss) on CCS, net change in financial guaranty VIEs and other income.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2010

(in millions)

(restated)

	Assured Guaranty Ltd (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Revenues
Net earned premiums	$	—	$	—		$	—		$	309.1		$	5.6		$	314.7
Net investment income	—		—			0.1			87.9			(3.7		)	84.3
Net realized investment gains (losses)	—		—			—			6.7			2.7			9.4
Net change in fair value of credit derivatives:
Realized gains and other settlements	—		—			—			26.7			—			26.7
Net unrealized gains (losses)	—		—			—			252.1			—			252.1
Net change in fair value of credit derivatives	—		—			—			278.8			—			278.8
Equity in earnings of subsidiaries	344.1		257.2			134.5			250.8			(986.6		)	—
Other income(1)	—		—			—			(23.3		)	0.2			(23.1		)
Total revenues	344.1		257.2			134.6			910.0			(981.8		)	664.1
Expenses
Loss and LAE	—		—			—			112.5			(1.6		)	110.9
Amortization of deferred acquisition costs	—		—			—			10.9			(2.7		)	8.2
Interest expense	—		9.8			13.4			5.6			(3.7		)	25.1
Other operating expenses(2)	10.6		0.1			0.6			55.4			(0.1		)	66.6
Total expenses	10.6		9.9			14.0			184.4			(8.1		)	210.8
Income (loss) before income taxes	333.5		247.3			120.6			725.6			(973.7		)	453.3
Total provision (benefit) for income taxes	—		(3.5		)	(4.8		)	123.4			4.7			119.8
Net income (loss)	$	333.5	$	250.8		$	125.4		$	602.2		$	(978.4	)	$	333.5

(1) Includes fair value gain (loss) on CCS, net change in financial guaranty VIEs and other income.

(2) Includes AGMH acquisition-related expenses and other operating expenses.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(in millions)

(restated)

	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities	$	12.0		$	6.3		$	(7.2	)	$	(111.2	)	$	(22.0	)	$	(122.1	)
Investing activities
Fixed maturity securities:
Purchases	—			—			(0.3		)	(511.4		)	—			(511.7		)
Sales	—			—			—			299.9			—			299.9
Maturities	—			—			0.2			183.4			—			183.6
Net sales (purchases) of short-term investments	(1.4		)	(16.4		)	7.3			252.8			—			242.3
Net proceeds from paydowns on financial guaranty variable interest entities’ assets	—			—			—			162.5			—			162.5
Other	—			—			—			4.2			—			4.2
Net cash flows provided by (used in) investing activities	(1.4		)	(16.4		)	7.2			391.4			—			380.8
Financing activities
Dividends paid	(8.3		)	—			—			(22.0		)	22.0			(8.3		)
Share activity under option and incentive plans	(2.3		)	—			—			—			—			(2.3		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(241.6		)	—			(241.6		)
Repayment of long-term debt	—			—			—			(5.1		)	—			(5.1		)
Net cash flows provided by (used in) financing activities	(10.6		)	—			—			(268.7		)	22.0			(257.3		)
Effect of exchange rate changes	—			—			—			1.8			—			1.8
Increase (decrease) in cash	—			(10.1		)	—			13.3			—			3.2
Cash at beginning of period	—			13.0			—			95.4			—			108.4
Cash at end of period	$	—		$	2.9		$	—		$	108.7		$	—		$	111.6

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2010

(in millions)

(restated)

	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities	$	2.1		$	11.5		$	(7.4	)	$	(201.6	)	$	(15.0	)	$	(210.4	)
Investing activities
Fixed maturity securities:
Purchases	—			—			—			(418.0		)	—			(418.0		)
Sales	—			—			—			187.8			—			187.8
Maturities	—			—			2.2			263.1			—			265.3
Net sales (purchases) of short-term investments	8.8			(11.3		)	5.3			217.0			—			219.8
Net proceeds from paydowns on financial guaranty variable interest entities’ assets	—			—			—			60.7			—			60.7
Other	—			—			—			4.8			—			4.8
Net cash flows provided by (used in) investing activities	8.8			(11.3		)	7.5			315.4			—			320.4
Financing activities
Dividends paid	(8.3		)	—			—			(15.0		)	15.0			(8.3		)
Share activity under option and incentive plans	(2.6		)	—			—			—			—			(2.6		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(46.2		)	—			(46.2		)
Repayment of long-term debt	—			—			—			(6.3		)	—			(6.3		)
Net cash flows provided by (used in) financing activities	(10.9		)	—			—			(67.5		)	15.0			(63.4		)
Effect of exchange rate changes	—			—			—			(0.2		)	—			(0.2		)
Increase (decrease) in cash	—			0.2			0.1			46.1			—			46.4
Cash at beginning of period	—			0.1			—			44.0			—			44.1
Cash at end of period	$	—		$	0.3		$	0.1		$	90.1		$	—		$	90.5