Subsidiary Information

The following tables present the condensed consolidating financial information for AGUS and AGMH, 100%-owned subsidiaries of AGL, which have issued publicly traded debt securities (see Note 16, Long Term Debt and Credit Facilities). The information for AGL, AGUS and AGMH presents its subsidiaries on the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JUNE 30, 2015

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	145	$	68	$	26	$	11,767	$	(300	)	$	11,706
Investment in subsidiaries	5,637		5,271		3,962		356		(15,226		)	—
Premiums receivable, net of commissions payable	—		—		—		844		(141		)	703
Ceded unearned premium reserve	—		—		—		1,373		(1,091		)	282
Deferred acquisition costs	—		—		—		186		(67		)	119
Reinsurance recoverable on unpaid losses	—		—		—		412		(335		)	77
Credit derivative assets	—		—		—		274		(193		)	81
Deferred tax asset, net	—		48		—		523		(132		)	439
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		1,601		—			1,601
Other	29		91		35		597		(281		)	471
TOTAL ASSETS	$	5,811	$	5,478	$	4,023	$	18,023	$	(17,856	)	$	15,479
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	5,606	$	(1,217	)	$	4,389
Loss and LAE reserve	—		—		—		1,323		(327		)	996
Long-term debt	—		847		442		16		—			1,305
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		1,200		(193		)	1,007
Deferred tax liabilities, net	—		—		92		—		(92		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		1,532		—			1,532
Other	5		11		16		833		(421		)	444
TOTAL LIABILITIES	5		948		550		10,810		(2,640		)	9,673
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	5,806		4,530		3,473		6,857		(14,860		)	5,806
Noncontrolling interest	—		—		—		356		(356		)	—
TOTAL SHAREHOLDERS' EQUITY	5,806		4,530		3,473		7,213		(15,216		)	5,806
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,811	$	5,478	$	4,023	$	18,023	$	(17,856	)	$	15,479

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 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	$	126	$	204	$	47	$	11,382	$	(300	)	$	11,459
Investment in subsidiaries	5,612		5,072		3,965		339		(14,988		)	—
Premiums receivable, net of commissions payable	—		—		—		864		(135		)	729
Ceded unearned premium reserve	—		—		—		1,469		(1,088		)	381
Deferred acquisition costs	—		—		—		186		(65		)	121
Reinsurance recoverable on unpaid losses	—		—		—		338		(260		)	78
Credit derivative assets	—		—		—		277		(209		)	68
Deferred tax asset, net	—		54		—		295		(89		)	260
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		1,402		—			1,402
Other	27		77		27		538		(242		)	427
TOTAL ASSETS	$	5,765	$	5,407	$	4,039	$	17,180	$	(17,466	)	$	14,925
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	5,328	$	(1,067	)	$	4,261
Loss and LAE reserve	—		—		—		1,066		(267		)	799
Long-term debt	—		847		437		19		—			1,303
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		1,172		(209		)	963
Deferred tax liabilities, net	—		—		94		—		(94		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		1,419		—			1,419
Other	7		9		16		764		(374		)	422
TOTAL LIABILITIES	7		946		547		10,068		(2,401		)	9,167
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	5,758		4,461		3,492		6,773		(14,726		)	5,758
Noncontrolling interest	—		—		—		339		(339		)	—
TOTAL SHAREHOLDERS’ EQUITY	5,758		4,461		3,492		7,112		(15,065		)	5,758
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,765	$	5,407	$	4,039	$	17,180	$	(17,466	)	$	14,925

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2015

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	226		$	(7	)	$	219
Net investment income	0			0			0			101			(3		)	98
Net realized investment gains (losses)	0			0			1			(10		)	0			(9		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			8			0			8
Net unrealized gains (losses)	—			—			—			108			(26		)	82
Net change in fair value of credit derivatives	—			—			—			116			(26		)	90
Bargain purchase gain and settlement of pre-existing relationships	—			—			—			54			160			214
Other	—			—			—			83			—			83
TOTAL REVENUES	0			0			1			570			124			695
EXPENSES
Loss and LAE	—			—			—			184			4			188
Amortization of deferred acquisition costs	—			—			—			8			(2		)	6
Interest expense	—			13			14			3			(4		)	26
Other operating expenses	9			1			0			57			(1		)	66
TOTAL EXPENSES	9			14			14			252			(3		)	286
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(9		)	(14		)	(13		)	318			127			409
Total (provision) benefit for income taxes	—			4			4			(78		)	(42		)	(112		)
Equity in net earnings of subsidiaries	306			305			122			11			(744		)	—
NET INCOME (LOSS)	$	297		$	295		$	113		$	251		$	(659	)	$	297
Less: noncontrolling interest	—			—			—			11			(11		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	297		$	295		$	113		$	240		$	(648	)	$	297

COMPREHENSIVE INCOME (LOSS)	$	166		$	210		$	50		$	122		$	(382	)	$	166

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	135		$	1		$	136
Net investment income	0			0			0			98			(2		)	96
Net realized investment gains (losses)	0			0			0			(8		)	—			(8		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			15			0			15
Net unrealized gains (losses)	—			—			—			88			—			88
Net change in fair value of credit derivatives	—			—			—			103			0			103
Other	—			—			—			27			(1		)	26
TOTAL REVENUES	0			0			0			355			(2		)	353
EXPENSES
Loss and LAE	—			—			—			53			4			57
Amortization of deferred acquisition costs	—			—			—			5			(2		)	3
Interest expense	—			7			14			3			(4		)	20
Other operating expenses	8			1			0			46			—			55
TOTAL EXPENSES	8			8			14			107			(2		)	135
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(8		)	(8		)	(14		)	248			—			218
Total (provision) benefit for income taxes	—			3			4			(67		)	1			(59		)
Equity in net earnings of subsidiaries	167			152			120			8			(447		)	—
NET INCOME (LOSS)	$	159		$	147		$	110		$	189		$	(446	)	$	159
Less: noncontrolling interest	—			—			—			16			(16		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	159		$	147		$	110		$	173		$	(430	)	$	159

COMPREHENSIVE INCOME (LOSS)	$	227		$	191		$	137		$	302		$	(630	)	$	227

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2015

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	366		$	(5	)	$	361
Net investment income	0			0			0			205			(6		)	199
Net realized investment gains (losses)	0			0			1			9			(3		)	7
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			29			0			29
Net unrealized gains (losses)	—			—			—			211			(26		)	185
Net change in fair value of credit derivatives	—			—			—			240			(26		)	214
Bargain purchase gain and settlement of pre-existing relationships	—			—			—			54			160			214
Other	—			—			—			69			—			69
TOTAL REVENUES	0			0			1			943			120			1,064
EXPENSES
Loss and LAE	—			—			—			202			4			206
Amortization of deferred acquisition costs	—			—			—			14			(4		)	10
Interest expense	—			26			27			7			(9		)	51
Other operating expenses	17			1			0			105			(1		)	122
TOTAL EXPENSES	17			27			27			328			(10		)	389
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(17		)	(27		)	(26		)	615			130			675
Total (provision) benefit for income taxes	—			9			9			(150		)	(45		)	(177		)
Equity in net earnings of subsidiaries	515			468			214			20			(1,217		)	—
NET INCOME (LOSS)	$	498		$	450		$	197		$	485		$	(1,132	)	$	498
Less: noncontrolling interest	—			—			—			20			(20		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	498		$	450		$	197		$	465		$	(1,112	)	$	498

COMPREHENSIVE INCOME (LOSS)	$	367		$	344		$	130		$	355		$	(829	)	$	367

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	266		$	2		$	268
Net investment income	0			0			0			203			(4		)	199
Net realized investment gains (losses)	0			0			0			(4		)	(2		)	(6		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			34			0			34
Net unrealized gains (losses)	—			—			—			(142		)	—			(142		)
Net change in fair value of credit derivatives	—			—			—			(108		)	0			(108		)
Other	—			—			—			196			(1		)	195
TOTAL REVENUES	0			0			0			553			(5		)	548
EXPENSES
Loss and LAE	—			—			—			92			6			98
Amortization of deferred acquisition costs	—			—			—			11			(3		)	8
Interest expense	—			14			27			8			(9		)	40
Other operating expenses	16			1			0			99			(1		)	115
TOTAL EXPENSES	16			15			27			210			(7		)	261
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(16		)	(15		)	(27		)	343			2			287
Total (provision) benefit for income taxes	—			5			9			(100		)	—			(86		)
Equity in net earnings of subsidiaries	217			239			289			16			(761		)	—
NET INCOME (LOSS)	$	201		$	229		$	271		$	259		$	(759	)	$	201
Less: noncontrolling interest	—			—			—			16			(16		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	201		$	229		$	271		$	243		$	(743	)	$	201

COMPREHENSIVE INCOME (LOSS)	$	373		$	356		$	349		$	560		$	(1,265	)	$	373

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2015

(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	$	343		$	138		$	83		$	170		$	(629	)	$	105
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(67		)	(6		)	(1,099		)	—			(1,172		)
Sales	—			159			27			1,195			—			1,381
Maturities	—			6			—			405			—			411
Sales (purchases) of short-term investments, net	(19		)	39			(1		)	363			—			382
Net proceeds from financial guaranty variable entities’ assets	—			—			—			70			—			70
Intercompany debt	—			—			—			—			—			—
Investment in subsidiary	—			—			25			—			(25		)	—
Acquisition of Radian Asset, net of cash acquired	—			—			—			(800		)	—			(800		)
Other	—			—			—			27			—			27
Net cash flows provided by (used in) investing activities	(19		)	137			45			161			(25		)	299
Cash flows from financing activities
Return of capital	—			—			—			(25		)	25			—
Dividends paid	(37		)	(275		)	(128		)	(226		)	629			(37		)
Repurchases of common stock	(285		)	—			—			—			—			(285		)
Share activity under option and incentive plans	(2		)	—			—			—			—			(2		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(78		)	—			(78		)
Payment of long-term debt	—			—			—			(2		)	—			(2		)
Intercompany debt	—			—			—			—			—			—
Net cash flows provided by (used in) financing activities	(324		)	(275		)	(128		)	(331		)	654			(404		)
Effect of exchange rate changes	—			—			—			—			—			—
Increase (decrease) in cash	—			—			—			—			—			—
Cash at beginning of period	0			0			4			71			—			75
Cash at end of period	$	0		$	0		$	4		$	71		$	—		$	75

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 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	$	264		$	68		$	32		$	275		$	(417	)	$	222
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(356		)	(6		)	(995		)	—			(1,357		)
Sales	—			126			7			311			—			444
Maturities	—			3			1			393			—			397
Sales (purchases) of short-term investments, net	(13		)	(199		)	6			155			—			(51		)
Net proceeds from financial guaranty variable entities’ assets	—			—			—			315			—			315
Intercompany debt	—			—			—			—			—			—
Investment in subsidiary	—			—			25			—			(25		)	—
Other	—			—			—			23			—			23
Net cash flows provided by (used in) investing activities	(13		)	(426		)	33			202			(25		)	(229		)
Cash flows from financing activities
Return of capital	—			—			—			(25		)	25			—
Dividends paid	(40		)	(200		)	(65		)	(152		)	417			(40		)
Repurchases of common stock	(212		)	—			—			—			—			(212		)
Share activity under option and incentive plans	1			—			—			—			—			1
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(311		)	—			(311		)
Net proceeds from issuance of long-term debt	—			496			—			—			—			496
Payment of long-term debt	—			—			—			(7		)	—			(7		)
Intercompany debt	—			—			—			—			—			—
Net cash flows provided by (used in) financing activities	(251		)	296			(65		)	(495		)	442			(73		)
Effect of exchange rate changes	—			—			—			2			—			2
Increase (decrease) in cash	—			(62		)	—			(16		)	—			(78		)
Cash at beginning of period	0			67			0			117			—			184
Cash at end of period	$	0		$	5		$	0		$	101		$	—		$	106