Subsidiary Information

9 Months Ended

Sep. 30, 2011

Subsidiary Information

Subsidiary Information

17. 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. The information for AGMH and AGUS presents its subsidiaries on the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2011

(in millions)

	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)			Other Subsidiaries		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Assets
Total investment portfolio and cash	$	12.3	$	28.6	$	54.9		$	11,340.0	$	—		$	11,435.8
Investment in subsidiaries	4,742.5		3,835.6		2,748.2			3,360.3		(14,686.6		)	—
Premiums receivable, net of ceding commissions payable	—		—		—			1,110.1		(123.0		)	987.1
Ceded unearned premium reserve	—		—		—			1,759.2		(1,011.7		)	747.5
Deferred acquisition costs	—		—		—			326.1		(95.1		)	231.0
Reinsurance recoverable on unpaid losses	—		—		—			183.5		(135.5		)	48.0
Credit derivative assets	—		—		—			526.5		(59.3		)	467.2
Deferred tax asset, net	—		14.3		(77.4		)	746.8		(7.5		)	676.2
Intercompany receivable	—		—		—			300.0		(300.0		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—			3,005.4		—			3,005.4
Other assets(1)	21.5		10.0		23.0			871.7		(119.4		)	806.8
Total assets	$	4,776.3	$	3,888.5	$	2,748.7		$	23,529.6	$	(16,538.1	)	$	18,405.0
Liabilities and shareholders’ equity
Unearned premium reserves	$	—	$	—	$	—		$	7,071.2	$	(959.4	)	$	6,111.8
Loss and LAE reserve	—		—		—			828.8		(158.1		)	670.7
Long-term debt	—		519.2		413.2			109.3		—			1,041.7
Intercompany payable	—		—		—			300.0		(300.0		)	—
Credit derivative liabilities	—		0.2		—			1,554.4		(59.3		)	1,495.3
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—			3,708.6		—			3,708.6
Other liabilities(2)	9.6		8.8		23.1			797.6		(228.9		)	610.2
Total liabilities	9.6		528.2		436.3			14,369.9		(1,705.7		)	13,638.3
Total shareholders’ equity	4,766.7		3,360.3		2,312.4			9,159.7		(14,832.4		)	4,766.7
Total liabilities and shareholders’ equity	$	4,776.3	$	3,888.5	$	2,748.7		$	23,529.6	$	(16,538.1	)	$	18,405.0

(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 SEPTEMBER 30, 2011

(in millions)

	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Revenues
Net earned premiums	$	—	$	—		$	—		$	208.6		$	2.5		$	211.1
Net investment income	—		—			0.2			97.1			(3.8		)	93.5
Net realized investment gains (losses)	—		—			—			(11.1		)	—			(11.1		)
Net change in fair value of credit derivatives:
Realized gains and other settlements	—		—			—			0.5			—			0.5
Net unrealized gains (losses)	—		—			—			1,155.4			—			1,155.4
Net change in fair value of credit derivatives	—		—			—			1,155.9			—			1,155.9
Equity in earnings of subsidiaries	765.9		586.7			17.1			580.2			(1,949.9		)	—
Other income(1)	—		—			—			(103.8		)	(0.6		)	(104.4		)
Total revenues	765.9		586.7			17.3			1,926.9			(1,951.8		)	1,345.0
Expenses
Loss and LAE	—		—			—			219.3			(4.4		)	214.9
Amortization of deferred acquisition costs	—		—			—			11.4			(4.1		)	7.3
Interest expense	—		9.8			13.4			5.5			(3.8		)	24.9
Other operating expenses	4.7		0.2			0.2			40.0			(3.2		)	41.9
Total expenses	4.7		10.0			13.6			276.2			(15.5		)	289.0
Income (loss) before income taxes	761.2		576.7			3.7			1,650.7			(1,936.3		)	1,056.0
Total provision (benefit) for income taxes	—		(3.5		)	(4.7		)	296.8			6.2			294.8
Net income (loss)	$	761.2	$	580.2		$	8.4		$	1,353.9		$	(1,942.5	)	$	761.2

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

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010

(in millions)

(Restated)

	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Revenues
Net earned premiums	$	—	$	—		$	—		$	284.2		$	4.5		$	288.7
Net investment income	—		—			0.1			89.2			(3.7		)	85.6
Net realized investment gains (losses)	—		—			—			(2.6		)	0.2			(2.4		)
Net change in fair value of credit derivatives:
Realized gains and other settlements	—		—			—			52.4			—			52.4
Net unrealized gains (losses)	—		—			—			(276.4		)	—			(276.4		)
Net change in fair value of credit derivatives	—		—			—			(224.0		)	—			(224.0		)
Equity in earnings of subsidiaries	169.7		188.8			286.5			182.3			(827.3		)	—
Other income(1)	—		—			—			200.0			(0.4		)	199.6
Total revenues	169.7		188.8			286.6			529.1			(826.7		)	347.5
Expenses
Loss and LAE	—		—			—			110.5			0.3			110.8
Amortization of deferred acquisition costs	—		—			—			11.5			(3.5		)	8.0
Interest expense	—		9.9			13.4			5.3			(3.7		)	24.9
Other operating expenses	5.1		0.1			0.6			48.3			(1.9		)	52.2
Total expenses	5.1		10.0			14.0			175.6			(8.8		)	195.9
Income (loss) before income taxes	164.6		178.8			272.6			353.5			(817.9		)	151.6
Total provision (benefit) for income taxes	—		(3.5		)	(6.6		)	(15.5		)	12.6			(13.0		)
Net income (loss)	$	164.6	$	182.3		$	279.2		$	369.0		$	(830.5	)	$	164.6

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

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(in millions)

	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Revenues
Net earned premiums	$	—	$	—		$	—		$	687.5		$	7.6		$	695.1
Net investment income	—		—			0.5			301.5			(11.3		)	290.7
Net realized investment gains (losses)	—		—			—			(13.4		)	—			(13.4		)
Net change in fair value of credit derivatives:
Realized gains and other settlements	—		—			—			25.1			—			25.1
Net unrealized gains (losses)	—		—			—			829.8			—			829.8
Net change in fair value of credit derivatives	—		—			—			854.9			—			854.9
Equity in earnings of subsidiaries	877.7		717.9			357.0			698.4			(2,651.0		)	—
Other income(1)	—		—			—			(84.9		)	(2.1		)	(87.0		)
Total revenues	877.7		717.9			357.5			2,444.0			(2,656.8		)	1,740.3
Expenses
Loss and LAE	—		—			—			314.5			(1.2		)	313.3
Amortization of deferred acquisition costs	—		—			—			39.6			(15.4		)	24.2
Interest expense	—		29.5			40.2			16.0			(11.3		)	74.4
Other operating expenses	18.5		0.5			0.9			132.2			(4.9		)	147.2
Total expenses	18.5		30.0			41.1			502.3			(32.8		)	559.1
Income (loss) before income taxes	859.2		687.9			316.4			1,941.7			(2,624.0		)	1,181.2
Total provision (benefit) for income taxes	—		(10.5		)	(14.2		)	336.8			9.9			322.0
Net income (loss)	$	859.2	$	698.4		$	330.6		$	1,604.9		$	(2,633.9	)	$	859.2

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

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(in millions)

(Restated)

	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Revenues
Net earned premiums	$	—	$	—		$	—		$	886.2		$	14.2		$	900.4
Net investment income	—		—			0.3			271.7			(11.2		)	260.8
Net realized investment gains (losses)	—		—			—			(5.7		)	4.3			(1.4		)
Net change in fair value of credit derivatives:
Realized gains and other settlements	—		—			—			117.5			—			117.5
Net unrealized gains (losses)	—		—			—			10.8			—			10.8
Net change in fair value of credit derivatives	—		—			—			128.3			—			128.3
Equity in earnings of subsidiaries	696.4		623.1			573.8			602.0			(2,495.3		)	—
Other income(1)	—		—			—			148.7			(0.5		)	148.2
Total revenues	696.4		623.1			574.1			2,031.2			(2,488.5		)	1,436.3
Expenses
Loss and LAE	—		—			—			305.0			2.4			307.4
Amortization of deferred acquisition costs	—		—			—			31.4			(8.3		)	23.1
Interest expense	—		29.5			40.2			16.4			(11.2		)	74.9
Other operating expenses(2)	19.2		2.9			1.8			147.6			(2.5		)	169.0
Total expenses	19.2		32.4			42.0			500.4			(19.6		)	574.4
Income (loss) before income taxes	677.2		590.7			532.1			1,530.8			(2,468.9		)	861.9
Total provision (benefit) for income taxes	—		(11.3		)	(16.2		)	189.4			22.8			184.7
Net income (loss)	$	677.2	$	602.0		$	548.3		$	1,341.4		$	(2,491.7	)	$	677.2

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

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

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(in millions)

	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	$	40.6		$	12.9		$	(33.6	)	$	655.1		$	(74.0	)	$	601.0
Cash flows from investing activities
Fixed maturity securities:
Purchases	—			—			(3.3		)	(1,784.7		)	—			(1,788.0		)
Sales	—			—			—			848.4			—			848.4
Maturities	—			—			0.5			502.4			—			502.9
Sales (purchases) of short-term investments, net	10.2			(23.6		)	(2.6		)	198.4			—			182.4
Net proceeds from financial guaranty variable entities’ assets	—			—			—			598.2			—			598.2
Investment in subsidiary	—			—			25.0			—			(25.0		)	—
Other	—			—			14.0			—			—			14.0
Net cash flows used in investing activities	10.2			(23.6		)	33.6			362.7			(25.0		)	357.9
Cash flows from financing activities
Return of capital	—			—			—			(25.0		)	25.0			—
Dividends paid	(24.8		)	—			—			(74.0		)	74.0			(24.8		)
Repurchases of common stock	(23.3		)	—			—			—			—			(23.3		)
Share activity under option and incentive plans	(2.7		)	—			—			—			—			(2.7		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(830.1		)	—			(830.1		)
Issuance of debt	—			—			—			—			—			—
Payment of long-term debt	—			—			—			(16.9		)	—			(16.9		)
Net cash flows provided by (used in) financing activities	(50.8		)	—			—			(946.0		)	99.0			(897.8		)
Effect of exchange rate changes	—			—			—			3.8			—			3.8
Increase (decrease) in cash	(0.0		)	(10.7		)	—			75.6			—			64.9
Cash at beginning of period	—			13.0			—			95.4			—			108.4
Cash at end of period	$	(0.0	)	$	2.3		$	—		$	171.0		$	—		$	173.3

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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	$	7.1		$	14.4		$	(32.2	)	$	(41.6	)	$	(52.0	)	$	(104.3	)
Cash flows from investing activities
Fixed maturity securities:
Purchases	—			—			(14.9		)	(1,913.8		)	—			(1,928.7		)
Sales	—			—			—			835.7			—			835.7
Maturities	—			—			5.6			724.0			—			729.6
Sales (purchases) of short-term investments, net	30.5			(14.5		)	16.5			698.7			—			731.2
Net proceeds from financial guaranty variable entities’ assets	—			—			—			323.6			—			323.6
Investment in subsidiary	—			—			25.0			—			(25.0		)	—
Other	—			—			—			15.7			—			15.7
Net cash flows used in investing activities	30.5			(14.5		)	32.2			683.9			(25.0		)	707.1
Cash flows from financing activities
Return of capital	—			—			—			(25.0		)	25.0			—
Dividends paid	(24.9		)	—			—			(52.0		)	52.0			(24.9		)
Repurchases of common stock	(10.5		)	—			—			—			—			(10.5		)
Share activity under option and incentive plans	(2.2		)	—			—			—			—			(2.2		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(497.3		)	—			(497.3		)
Issuance of debt	—			—			—			—			—			—
Payment of long-term debt	—			—			—			(16.1		)	—			(16.1		)
Net cash flows provided by (used in) financing activities	(37.6		)	—			—			(590.4		)	77.0			(551.0		)
Effect of exchange rate changes	—			—			—			(1.5		)	—			(1.5		)
Increase (decrease) in cash	—			(0.1		)	—			50.4			—			50.3
Cash at beginning of period	—			0.1			—			44.0			—			44.1
Cash at end of period	$	—		$	—		$	—		$	94.4		$	—		$	94.4