Financial Guaranty Insurance Premiums

The portfolio of outstanding exposures discussed in Note 3, Outstanding Exposure, includes financial guaranty contracts that meet the definition of insurance contracts as well as those that meet the definition of a derivative under GAAP. Amounts presented in this note relate only to financial guaranty insurance contracts, unless otherwise noted. See Note 8, Financial Guaranty Contracts Accounted for as Credit Derivatives for amounts that relate to CDS.

Net Earned Premiums



	Third Quarter				Nine Months
	2014		2013		2014		2013
	(in millions)
Scheduled net earned premiums	$	105	$	117	$	318	$	358
Acceleration of net earned premiums	36		40		79		199
Accretion of discount on net premiums receivable	3		2		14		12
Financial guaranty insurance net earned premiums	144		159		411		569
Other	0		0		1		1
Net earned premiums(1)	$	144	$	159	$	412	$	570

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(1)	Excludes $5 million and $14 million for Third Quarter 2014 and 2013, respectively, and $27 million and $47 million for Nine Months 2014 and 2013, respectively, related to consolidated FG VIEs.

Components of Unearned Premium Reserve



	As of September 30, 2014									As of December 31, 2013
	Gross			Ceded			Net(1)			Gross			Ceded			Net(1)
	(in millions)
Deferred premium revenue:
Financial guaranty insurance	$	4,322		$	433		$	3,889		$	4,647		$	470		$	4,177
Other	4			—			4			5			—			5
Deferred premium revenue	$	4,326		$	433		$	3,893		$	4,652		$	470		$	4,182
Contra-paid (2)	(63		)	(13		)	(50		)	(57		)	(18		)	(39		)
Unearned premium reserve	$	4,263		$	420		$	3,843		$	4,595		$	452		$	4,143

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(1)	Excludes $128 million and $187 million of deferred premium revenue, and $49 million and $55 million of contra-paid related to FG VIEs as of September 30, 2014 and December 31, 2013, respectively.


(2)	See Note 6, "Financial Guaranty Insurance Losses– Insurance Contracts' Loss Information" for an explanation of "contra-paid".

Gross Premium Receivable,

Net of Commissions on Assumed Business

Roll Forward



	Nine Months
	2014			2013
	(in millions)
Beginning of period, December 31	$	876		$	1,005
Gross premium written, net of commissions on assumed business	116			72
Gross premiums received, net of commissions on assumed business	(172		)	(167		)
Adjustments:
Changes in the expected term	(21		)	(14		)
Accretion of discount, net of commissions on assumed business	17			15
Foreign exchange translation	(16		)	(7		)
Other adjustments	1			2
End of period, September 30 (1)	$	801		$	906

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(1)	Excludes $18 million and $19 million as of September 30, 2014 and September 30, 2013, respectively, related to consolidated FG VIEs.

Gains or losses due to foreign exchange rate changes relate to installment premium receivables denominated in currencies other than the U.S. dollar. Approximately 49% and 48% of installment premiums at September 30, 2014 and December 31, 2013 respectively, are denominated in currencies other than the U.S. dollar, primarily the Euro and British Pound Sterling.

The timing and cumulative amount of actual collections may differ from expected collections in the tables below due to factors such as foreign exchange rate fluctuations, counterparty collectability issues, accelerations, commutations and changes in expected lives.

Expected Collections of

Gross Premiums Receivable,

Net of Commissions on Assumed Business

(Undiscounted)



	As of September 30, 2014
	(in millions)
2014 (October 1 – December 31)	$	37
2015	99
2016	84
2017	77
2018	69
2019-2023	275
2024-2028	169
2029-2033	117
After 2033	125
Total(1)	$	1,052

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(1)	Excludes expected cash collections on FG VIEs of $23 million.

Scheduled Net Earned Premiums



	As of September 30, 2014
	(in millions)
2014 (October 1–December 31)	$	99
2015	360
2016	334
2017	297
2018	271
2019 - 2023	1,056
2024 - 2028	678
2029 - 2033	414
After 2033	380
Total present value basis(1)	3,889
Discount	218
Total future value	$	4,107

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(1)	Excludes scheduled net earned premiums on consolidated FG VIEs of $128 million.

Selected Information for Policies Paid in Installments



	As of September 30, 2014			As of December 31, 2013
	(dollars in millions)
Premiums receivable, net of commission payable	$	801		$	876
Gross deferred premium revenue	1,442			1,576
Weighted-average risk-free rate used to discount premiums	3.4		%	3.4		%
Weighted-average period of premiums receivable (in years)	9.3			9.4