Financial Guaranty Insurance Losses (Tables)

12 Months Ended

Dec. 31, 2012

Financial Guaranty Insurance Losses [Abstract]

Schedule of Insured Financial Obligations with Credit Deterioration [Table Text Block]

Loss and LAE Reserve (Recovery)

Net of Reinsurance and Salvage and Subrogation Recoverable

Insurance Contracts

	As of December 31, 2012									As of December 31, 2011
	Loss and LAE Reserve, net			Salvage and Subrogation Recoverable, net			Net			Loss and LAE Reserve, net			Salvage and Subrogation Recoverable, net			Net
	(in millions)
U.S. RMBS:
First lien:
Prime first lien	$	3		$	—		$	3		$	1		$	—		$	1
Alt-A first lien	93			—			93			70			55			15
Option ARM	52			216			(164		)	142			141			1
Subprime	82			0			82			51			0			51
Total first lien	230			216			14			264			196			68
Second lien:
Closed-end second lien	5			72			(67		)	11			136			(125		)
HELOC	37			196			(159		)	61			177			(116		)
Total second lien	42			268			(226		)	72			313			(241		)
Total U.S. RMBS	272			484			(212		)	336			509			(173		)
TruPS	1			—			1			11			—			11
Other structured finance	197			4			193			223			6			217
U.S. public finance	104			134			(30		)	62			70			(8		)
Non-U.S. public finance	31			—			31			38			—			38
Total financial guaranty	605			622			(17		)	670			585			85
Other	2			5			(3		)	2			—			2
Subtotal	607			627			(20		)	672			585			87
Effect of consolidating FG VIEs	(64		)	(217		)	153			(62		)	(258		)	196
Total (1)	$	543		$	410		$	133		$	610		$	327		$	283

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(1)See “Components of Net Reserves (Salvage)” table for loss and LAE reserve and salvage and subrogation recoverable components.

Balance Sheet Classification of

Net Expected Recoveries for Breaches of R&W

	As of December 31, 2012							As of December 31, 2011
	For all Financial Guaranty Insurance Contracts		Effect of Consolidating FG VIEs			Reported on Balance Sheet(1)		For all Financial Guaranty Insurance Contracts		Effect of Consolidating FG VIEs			Reported on Balance Sheet(1)
	(in millions)
Salvage and subrogation recoverable	$	449	$	(169	)	$	280	$	402	$	(197	)	$	205
Loss and LAE reserve	571		(33		)	538		858		(75		)	783

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(1) The remaining benefit for R&W is not recorded on the balance sheet until the expected loss, net of R&W, exceeds unearned premium reserve.

Net Expected Loss to be Expensed

Insurance Contracts

	As of December 31, 2012
	(in millions)
2013 (January 1 - March 31)	$	19
2013 (April 1 - June 30)	19
2013 (July 1 - September 30)	18
2013 (October 1–December 31)	16
Subtotal 2013	72
2014	48
2015	42
2016	37
2017	36
2018 - 2022	127
2023 - 2027	59
2028 - 2032	29
After 2032	19
Total present value basis(1)	469
Discount	251
Total future value	$	720

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(1) Consolidation of FG VIEs resulted in reductions of $156 million in net expected loss to be expensed.

Components of Net Reserves (Salvage)

Insurance Contracts

	As of December 31, 2012			As of December 31, 2011
	(in millions)
Loss and LAE reserve	$	601		$	679
Reinsurance recoverable on unpaid losses	(58		)	(69		)
Subtotal	543			610
Salvage and subrogation recoverable	(456		)	(368		)
Salvage and subrogation payable(1)	46			41
Subtotal	(410		)	(327		)
Other recoveries(2)	(30		)	—
Subtotal	(440		)	(327		)
Total	103			283
Less: other	(3		)	2
Financial guaranty net reserves (salvage)	$	106		$	281

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

(2)     R&W recoveries recorded in other assets on the consolidated balance sheet.

Financial Guaranty Insurance BIG Transaction Loss Summary

December 31, 2012

	BIG Categories
	BIG 1						BIG 2						BIG 3						Total BIG, Net			Effect of Consolidating FG VIEs			Total
	Gross			Ceded			Gross			Ceded			Gross			Ceded
	(dollars in millions)
Number of risks(1)	153			(57		)	76			(22		)	142			(51		)	371			—			371
Remaining weighted-average contract period (in years)	11.0			9.3			11.5			15.3			8.5			5.8			10.2			—			10.2
Outstanding exposure:
Principal	$	8,533		$	(1,484	)	$	2,741		$	(135	)	$	7,568		$	(540	)	$	16,683		$	—		$	16,683
Interest	4,357			(585		)	1,813			(131		)	2,269			(137		)	7,586			—			7,586
Total(2)	$	12,890		$	(2,069	)	$	4,554		$	(266	)	$	9,837		$	(677	)	$	24,269		$	—		$	24,269
Expected cash outflows (inflows)	$	1,582		$	(677	)	$	863		$	(58	)	$	3,052		$	(156	)	$	4,606		$	(738	)	$	3,868
Potential recoveries(3)	(1,629		)	653			(509		)	18			(2,639		)	142			(3,964		)	798			(3,166		)
Subtotal	(47		)	(24		)	354			(40		)	413			(14		)	642			60			702
Discount	(1		)	9			(107		)	14			(202		)	0			(287		)	36			(251		)
Present value of expected cash flows	$	(48	)	$	(15	)	$	247		$	(26	)	$	211		$	(14	)	$	355		$	96		$	451
Deferred premium revenue	$	111		$	(24	)	$	227		$	(15	)	$	757		$	(90	)	$	966		$	(251	)	$	715
Reserves (salvage)(4)	$	(103	)	$	(4	)	$	102		$	(18	)	$	(35	)	$	11		$	(47	)	$	153		$	106

Financial Guaranty Insurance BIG Transaction Loss Summary

December 31, 2011

	BIG Categories
	BIG 1						BIG 2						BIG 3						Total BIG, Net			Effect of Consolidating FG VIEs			Total
	Gross			Ceded			Gross			Ceded			Gross			Ceded
	(dollars in millions)
Number of risks(1)	171			(68		)	71			(26		)	126			(48		)	368			—			368
Remaining weighted-average contract period (in years)	10.0			9.2			13.7			20.5			9.2			6.4			10.4			—			10.4
Outstanding exposure:
Principal	$	9,675		$	(1,378	)	$	3,732		$	(274	)	$	7,831		$	(627	)	$	18,959		$	—		$	18,959
Interest	4,309			(486		)	2,889			(405		)	2,486			(170		)	8,623			—			8,623
Total(2)	$	13,984		$	(1,864	)	$	6,621		$	(679	)	$	10,317		$	(797	)	$	27,582		$	—		$	27,582
Expected cash outflows (inflows)	$	1,731		$	(659	)	$	1,833		$	(121	)	$	2,423		$	(133	)	$	5,074		$	(998	)	$	4,076
Potential recoveries(3)	(1,798		)	664			(1,079		)	39			(2,041		)	100			(4,115		)	1,060			(3,055		)
Subtotal	(67		)	5			754			(82		)	382			(33		)	959			62			1,021
Discount	16			(5		)	(241		)	32			(125		)	2			(321		)	45			(276		)
Present value of expected cash flows	$	(51	)	$	0		$	513		$	(50	)	$	257		$	(31	)	$	638		$	107		$	745
Deferred premium revenue	$	261		$	(69	)	$	281		$	(12	)	$	992		$	(127	)	$	1,326		$	(391	)	$	935
Reserves (salvage)(4)	$	(97	)	$	7		$	320		$	(42	)	$	(110	)	$	7		$	85		$	196		$	281

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(1) A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making Debt Service payments. The ceded number of risks represents the number of risks for which the Company ceded a portion of its exposure.

(2) Includes BIG amounts related to FG VIEs.

(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).”

Loss and LAE

Reported on the

Consolidated Statements of Operations

	Year Ended December 31,
	2012			2011			2010
U.S. RMBS:
First lien:
Prime first lien	$	2		$	—		$	1
Alt-A first lien	51			53			37
Option ARM	137			203			272
Subprime	38			(39		)	86
Total first lien	228			217			396
Second lien:
Closed end second lien	31			1			5
HELOC	49			171			(20		)
Total second lien	80			172			(15		)
Total U.S. RMBS	308			389			381
TruPS	(10		)	11			(5		)
Other structured finance	3			107			69
U.S. public finance	51			15			28
Non-U.S. public finance	234			33			5
Subtotal	586			555			478
Other	(17		)	—			—
Total insurance contracts before FG VIE consolidation	569			555			478
Effect of consolidating FG VIEs	(46		)	(93		)	(66		)
Total loss and LAE	$	523		$	462		$	412