Acquisition of Radian Asset Assurance Inc. (Tables)

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Schedule of fair values of assets and liabilities acquired from acquisition

The following table shows the net effect of the Radian Asset Acquisition at the Acquisition Date, including the effects of the settlement of pre-existing relationships.

	Fair Value of Net Assets Acquired, before Settlement of Pre-existing Relationships			Net effect of Settlement of Pre-existing Relationships			Net Effect of Radian Asset Acquisition
	(in millions)
Cash purchase price(1)	$	804		$	—		$	804
Identifiable assets acquired:
Investments	1,473			—			1,473
Cash	4			—			4
Ceded unearned premium reserve	(3		)	(65		)	(68		)
Credit derivative assets	30			—			30
Deferred tax asset, net	263			(56		)	207
Financial guaranty VIE assets	122			—			122
Other assets	86			(67		)	19
Total assets	1,975			(188		)	1,787
Liabilities assumed:
Unearned premium reserves	697			(216		)	481
Credit derivative liabilities	271			(26		)	245
Financial guaranty VIE liabilities	118			—			118
Other liabilities	30			(49		)	(19		)
Total liabilities	1,116			(291		)	825
Net asset effect of Radian Asset Acquisition	859			103			962
Bargain purchase gain and settlement of pre-existing relationships resulting from Radian Asset Acquisition, after-tax	55			103			158
Deferred tax	—			56			56
Bargain purchase gain and settlement of pre-existing relationships resulting from Radian Asset Acquisition, pre-tax	$	55		$	159		$	214

_____________________

(1) The cash purchase price of $804 million was the cash transferred for the acquisition which was allocated as follows: (1) $987 million for the purchase of net assets of $1,042 million, and (2) the settlement of pre-existing relationships between Radian and Assured Guaranty at a fair value of $(183) million.

Schedule of settlement of pre-existing relationships

The following table shows the net effect of the Radian Asset Acquisition at the Acquisition Date, including the effects of the settlement of pre-existing relationships.

	Fair Value of Net Assets Acquired, before Settlement of Pre-existing Relationships			Net effect of Settlement of Pre-existing Relationships			Net Effect of Radian Asset Acquisition
	(in millions)
Cash purchase price(1)	$	804		$	—		$	804
Identifiable assets acquired:
Investments	1,473			—			1,473
Cash	4			—			4
Ceded unearned premium reserve	(3		)	(65		)	(68		)
Credit derivative assets	30			—			30
Deferred tax asset, net	263			(56		)	207
Financial guaranty VIE assets	122			—			122
Other assets	86			(67		)	19
Total assets	1,975			(188		)	1,787
Liabilities assumed:
Unearned premium reserves	697			(216		)	481
Credit derivative liabilities	271			(26		)	245
Financial guaranty VIE liabilities	118			—			118
Other liabilities	30			(49		)	(19		)
Total liabilities	1,116			(291		)	825
Net asset effect of Radian Asset Acquisition	859			103			962
Bargain purchase gain and settlement of pre-existing relationships resulting from Radian Asset Acquisition, after-tax	55			103			158
Deferred tax	—			56			56
Bargain purchase gain and settlement of pre-existing relationships resulting from Radian Asset Acquisition, pre-tax	$	55		$	159		$	214

_____________________

(1) The cash purchase price of $804 million was the cash transferred for the acquisition which was allocated as follows: (1) $987 million for the purchase of net assets of $1,042 million, and (2) the settlement of pre-existing relationships between Radian and Assured Guaranty at a fair value of $(183) million.

Schedule of business combination related expenses

Radian Asset Acquisition-Related Expenses

	Nine Months 2015
	(in millions)
Professional services	$	2
Financial advisory fees	10
Total	$	12

Schedule of unaudited pro forma results of operations

Pro Forma Unaudited Results of Operations

	Nine Months 2015		Nine Months 2014
	(in millions, except per share amounts)
Pro forma revenues	$	1,255	$	1,542
Pro forma net income	493		958
Pro forma earnings per share:
Basic	3.27		5.43
Diluted	3.25		5.40