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)
			(restated)
Scheduled net earned premiums	$	202.7	$	271.7	$	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		9.2		14.8		21.3
Total financial guaranty	229.5		296.3		483.0		610.4
Other	0.5		0.7		1.0		1.3
Total net earned premiums(2)	$	230.0	$	297.0	$	484.0	$	611.7

(1) Reflects the unscheduled refundings of underlying insured obligations.

(2) Excludes $18.3 million and $10.7 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

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 exclude $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)
	(restated)			(restated)
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	159.1			24.5			(3.0		)	180.6
Public finance	88.9			(13.5		)	(9.2		)	66.2
Total	$	408.8		$	(81.9	)	$	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)
	(restated)			(restated)						(restated)
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	(206.6		)	28.7			(315.8		)	(493.7		)
Total second lien	(7.3		)	(11.7		)	(355.7		)	(374.7		)
Total U.S. RMBS	819.8			148.5			(436.1		)	532.2
Other structured finance	115.7			36.0			(5.6		)	146.1
Public finance	130.9			(8.1		)	(34.2		)	88.6
Total	$	1,066.4		$	176.4		$	(475.9	)	$	766.9

(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)
				(restated)
Net expected loss to be paid	$	713.0		$	408.8
Less: net expected loss to be paid for FG VIEs	(5.6		)	49.2
Total	718.6			359.6
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		)	(550.0		)
Net expected loss to be expensed(3)	$	589.1		$	833.9

(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

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)
										(restated)						(restated)
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			131.1			1.4			129.7
Public finance	64.0			37.9			26.1			81.6			34.4			47.2
Total financial guaranty	554.8			464.8			90.0			599.5			995.2			(395.7		)
Other	2.1			—			2.1			2.1			—			2.1
Subtotal	556.9			464.8			92.1			601.6			995.2			(393.6		)
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		$	552.1		$	903.0		$	(350.9	)

(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 $574.4 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)
	(restated)			(restated)			(restated)			(restated)
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			29.1
Total second lien	30.5			(0.3		)	81.6			22.0
Total U.S. RMBS	125.6			80.6			146.3			177.5
Other structured finance	11.1			31.8			31.4			42.3
Public finance	4.1			(16.8		)	(11.7		)	10.9
Total financial guaranty	140.8			95.6			166.0			230.7
Other	—			0.1			—			0.1
Subtotal	140.8			95.7			166.0			230.8
Effect of consolidating FG VIEs	(16.9		)	(10.0		)	(67.6		)	(34.2		)
Total loss and LAE (recoveries)	$	123.9		$	85.7		$	98.4		$	196.6

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,			Effect of Consolidating
	Gross			Ceded			Gross			Ceded			Gross			Ceded			Net(1)			VIEs			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
Potential recoveries(3)	(378.2		)	26.9			(633.7		)	23.4			(2,229.6		)	103.8			(3,087.4		)	588.2			(2,499.2		)
Subtotal	(149.7		)	18.5			914.7			(62.4		)	485.7			(40.5		)	1,166.3			(5.6		)	1,160.7
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,			Effect of Consolidating
	Gross			Ceded			Gross			Ceded			Gross			Ceded			Net(1)			VIEs			Total
	(dollars in millions)
	(restated)			(restated)			(restated)			(restated)									(restated)						(restated)
Number of risks(2)	119			(45		)	98			(42		)	115			(42		)	332			—			332
Remaining weighted average contract period (in years)	11.7			16.0			8.4			7.9			8.8			6.0			9.6			—			9.6
Net outstanding exposure:
Principal	$	6,173.0		$	(723.3	)	$	5,899.3		$	(182.8	)	$	7,954.5		$	(673.6	)	$	18,447.1		$	—		$	18,447.1
Interest	3,599.5			(580.4		)	2,601.6			(70.9		)	2,490.7			(186.3		)	7,854.2			—			7,854.2
Total	$	9,772.5		$	(1,303.7	)	$	8,500.9		$	(253.7	)	$	10,445.2		$	(859.9	)	$	26,301.3		$	—		$	26,301.3
Expected cash flows	$	303.9		$	(20.2	)	$	2,036.6		$	(68.9	)	$	2,256.6		$	(133.2	)	$	4,374.8		$	(384.2	)	$	3,990.6
Potential recoveries(3)	(375.2		)	37.4			(533.0		)	16.6			(2,543.6		)	197.5			(3,200.3		)	354.8			(2,845.5		)
Subtotal	(71.3		)	17.2			1,503.6			(52.3		)	(287.0		)	64.3			1,174.5			(29.4		)	1,145.1
Discount	(21.0		)	(5.5		)	(613.2		)	21.5			(139.6		)	(7.9		)	(765.7		)	(19.8		)	(785.5		)
Present value of expected cash flows	$	(92.3	)	$	11.7		$	890.4		$	(30.8	)	$	(426.6	)	$	56.4		$	408.8		$	(49.2	)	$	359.6
Deferred premium revenue	$	169.9		$	(16.9	)	$	572.4		$	(30.3	)	$	995.9		$	(120.7	)	$	1,570.3		$	(263.9	)	$	1,306.4
Reserves (salvage)(4)	$	(112.9	)	$	12.4		$	424.4		$	(9.5	)	$	(815.9	)	$	105.8		$	(395.7	)	$	42.7		$	(353.0	)

(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)
				(restated)
Loss and LAE reserve	$	518.1		$	574.4
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			(350.9		)
Less: other	2.1			2.1
Financial guaranty reserves, net of salvage and subrogation	$	218.1		$	(353.0	)

(1) Recorded as a component of reinsurance balances payable.