Subsidiary Information

The following tables present the condensed consolidating financial information for AGUS and AGMH, wholly-owned subsidiaries of AGL, which have issued publicly traded debt securities (see Note 15, Long-Term Debt and Credit Facilities) as of March 31, 2014 and December 31, 2013 and for First Quarter 2014 and 2013. The information for AGUS and AGMH presents its subsidiaries on the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF MARCH 31, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	36	$	186	$	61	$	11,184	$	(300	)	$	11,167
Investment in subsidiaries	5,158		4,360		3,769		304		(13,591		)	—
Premiums receivable, net of commissions payable	—		—		—		997		(134		)	863
Ceded unearned premium reserve	—		—		—		1,582		(1,128		)	454
Deferred acquisition costs	—		—		—		194		(72		)	122
Reinsurance recoverable on unpaid losses	—		—		—		187		(150		)	37
Credit derivative assets	—		—		—		510		(432		)	78
Deferred tax asset, net	—		108		—		618		(89		)	637
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		1,257		—			1,257
Other	20		9		35		603		(176		)	491
TOTAL ASSETS	$	5,214	$	4,663	$	3,865	$	17,526	$	(16,162	)	$	15,106
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	5,611	$	(1,107	)	$	4,504
Loss and LAE reserve	—		—		—		791		(155		)	636
Long-term debt	—		348		431		33		—			812
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		2,433		(432		)	2,001
Deferred tax liabilities, net	—		—		95		—		(95		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		1,447		—			1,447
Other	5		14		21		762		(305		)	497
TOTAL LIABILITIES	5		452		547		11,377		(2,484		)	9,897
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	5,209		4,211		3,318		5,845		(13,374		)	5,209
Noncontrolling interest	—		—		—		304		(304		)	—
TOTAL SHAREHOLDERS' EQUITY	5,209		4,211		3,318		6,149		(13,678		)	5,209
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,214	$	4,663	$	3,865	$	17,526	$	(16,162	)	$	15,106

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2013

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	33	$	186	$	42	$	11,008	$	(300	)	$	10,969
Investment in subsidiaries	5,066		4,191		3,574		289		(13,120		)	—
Premiums receivable, net of commissions payable	—		—		—		1,025		(149		)	876
Ceded unearned premium reserve	—		—		—		1,598		(1,146		)	452
Deferred acquisition costs	—		—		—		198		(74		)	124
Reinsurance recoverable on unpaid losses	—		—		—		170		(134		)	36
Credit derivative assets	—		—		—		482		(388		)	94
Deferred tax asset, net	—		97		—		681		(90		)	688
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		2,565		—			2,565
Other	23		17		31		638		(226		)	483
TOTAL ASSETS	$	5,122	$	4,491	$	3,647	$	18,744	$	(15,717	)	$	16,287
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	5,720	$	(1,125	)	$	4,595
Loss and LAE reserve	—		—		—		733		(141		)	592
Long-term debt	—		348		430		38		—			816
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		2,175		(388		)	1,787
Deferred tax liabilities, net	—		—		95		—		(95		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		2,871		—			2,871
Other	7		7		16		853		(372		)	511
TOTAL LIABILITIES	7		445		541		12,690		(2,511		)	11,172
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	5,115		4,046		3,106		5,765		(12,917		)	5,115
Noncontrolling interest	—		—		—		289		(289		)	—
TOTAL SHAREHOLDERS’ EQUITY	5,115		4,046		3,106		6,054		(13,206		)	5,115
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,122	$	4,491	$	3,647	$	18,744	$	(15,717	)	$	16,287

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	131		$	1		$	132
Net investment income	0			0			0			105			(2		)	103
Net realized investment gains (losses)	0			—			0			4			(2		)	2
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			19			0			19
Net unrealized gains (losses)	—			—			—			(230		)	—			(230		)
Net change in fair value of credit derivatives	—			—			—			(211		)	0			(211		)
Other	—			—			—			169			—			169
TOTAL REVENUES	0			0			0			198			(3		)	195
EXPENSES
Loss and LAE	—			—			—			39			2			41
Amortization of deferred acquisition costs	—			—			—			6			(1		)	5
Interest expense	—			7			13			5			(5		)	20
Other operating expenses	8			0			0			53			(1		)	60
TOTAL EXPENSES	8			7			13			103			(5		)	126
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(8		)	(7		)	(13		)	95			2			69
Total (provision) benefit for income taxes	—			2			5			(33		)	(1		)	(27		)
Equity in net earnings of subsidiaries	50			87			169			8			(314		)	—
NET INCOME (LOSS)	$	42		$	82		$	161		$	70		$	(313	)	$	42
Less: noncontrolling interest	—			—			—			8			(8		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	42		$	82		$	161		$	62		$	(305	)	$	42

COMPREHENSIVE INCOME (LOSS)	$	146		$	165		$	212		$	258		$	(635	)	$	146

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2013

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	246		$	2		$	248
Net investment income	0			0			0			99			(5		)	94
Net realized investment gains (losses)	0			—			0			28			—			28
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			18			—			18
Net unrealized gains (losses)	—			—			—			(610		)	—			(610		)
Net change in fair value of credit derivatives	—			—			—			(592		)	—			(592		)
Other	—			—			—			47			(1		)	46
TOTAL REVENUES	0			0			0			(172		)	(4		)	(176		)
EXPENSES
Loss and LAE	—			—			—			(44		)	(4		)	(48		)
Amortization of deferred acquisition costs	—			—			—			8			(5		)	3
Interest expense	—			7			13			6			(5		)	21
Other operating expenses	5			0			—			58			(3		)	60
TOTAL EXPENSES	5			7			13			28			(17		)	36
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(5		)	(7		)	(13		)	(200		)	13			(212		)
Total (provision) benefit for income taxes	—			3			5			65			(5		)	68
Equity in net earnings of subsidiaries	(139		)	(82		)	162			—			59			—
NET INCOME (LOSS)	$	(144	)	$	(86	)	$	154		$	(135	)	$	67		$	(144	)

COMPREHENSIVE INCOME (LOSS)	$	(212	)	$	(137	)	$	117		$	(253	)	$	273		$	(212	)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities	$	58		$	0		$	(6	)	$	111		$	(62	)	$	101
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(1		)	(3		)	(513		)	—			(517		)
Sales	—			—			—			155			—			155
Maturities	—			—			—			148			—			148
Sales (purchases) of short-term investments, net	(3		)	—			(16		)	203			—			184
Net proceeds from financial guaranty variable entities’ assets	—			—			—			286			—			286
Investment in subsidiary	—			—			25			—			(25		)	—
Other	—			—			—			19			—			19
Net cash flows provided by (used in) investing activities	(3		)	(1		)	6			298			(25		)	275
Cash flows from financing activities
Return of capital	—			—			—			(25		)	25			—
Dividends paid	(20		)	—			—			(62		)	62			(20		)
Repurchases of common stock	(35		)	—			—			—			—			(35		)
Share activity under option and incentive plans	0			—			—			—			—			0
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(281		)	—			(281		)
Payment of long-term debt	—			—			—			(6		)	—			(6		)
Net cash flows provided by (used in) financing activities	(55		)	—			—			(374		)	87			(342		)
Effect of exchange rate changes	—			—			—			1			—			1
Increase (decrease) in cash	—			(1		)	—			36			—			35
Cash at beginning of period	0			67			0			117			—			184
Cash at end of period	$	0		$	66		$	0		$	153		$	—		$	219

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2013

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities	$	36		$	1		$	(6	)	$	(5	)	$	(40	)	$	(14	)
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(1		)	—			(509		)	—			(510		)
Sales	40			—			7			136			—			183
Maturities	18			—			1			264			—			283
Sales (purchases) of short-term investments, net	(34		)	—			(27		)	149			—			88
Net proceeds from financial guaranty variable entities’ assets	—			—			—			138			—			138
Investment in subsidiary	—			—			25			—			(25		)	—
Other	—			—			—			55			—			55
Net cash flows provided by (used in) investing activities	24			(1		)	6			233			(25		)	237
Cash flows from financing activities
Return of capital	—			—			—			(25		)	25			—
Dividends paid	(19		)	—			—			(40		)	40			(19		)
Repurchases of common stock	(39		)	—			—			—			—			(39		)
Share activity under option and incentive plans	(2		)	—			—			—			—			(2		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(167		)	—			(167		)
Payment of long-term debt	—			—			—			(6		)	—			(6		)
Net cash flows provided by (used in) financing activities	(60		)	—			—			(238		)	65			(233		)
Effect of exchange rate changes	—			—			—			(3		)	—			(3		)
Increase (decrease) in cash	—			—			—			(13		)	—			(13		)
Cash at beginning of period	—			13			0			125			—			138
Cash at end of period	$	—		$	13		$	0		$	112		$	—		$	125