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 15, 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, 2016

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	42	$	85	$	20	$	11,113	$	(355	)	$	10,905
Investment in subsidiaries	6,173		5,705		4,167		284		(16,329		)	—
Premiums receivable, net of commissions payable	—		—		—		748		(125		)	623
Ceded unearned premium reserve	—		—		—		1,189		(961		)	228
Deferred acquisition costs	—		—		—		167		(57		)	110
Reinsurance recoverable on unpaid losses	—		—		—		532		(450		)	82
Credit derivative assets	—		—		—		144		(108		)	36
Deferred tax asset, net	—		29		—		335		(129		)	235
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		814		—			814
Funds restricted for CIFG acquisition	—		—		—		451		—			451
Other	39		63		35		756		(285		)	608
TOTAL ASSETS	$	6,254	$	5,882	$	4,222	$	16,623	$	(18,889	)	$	14,092
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	4,675	$	(1,058	)	$	3,617
Loss and LAE reserve	—		—		—		1,790		(522		)	1,268
Long-term debt	—		842		449		12		—			1,303
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		540		(108		)	432
Deferred tax liabilities, net	—		—		90		—		(90		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		905		—			905
Other	4		15		14		692		(408		)	317
TOTAL LIABILITIES	4		947		553		8,914		(2,576		)	7,842
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	6,250		4,935		3,669		7,425		(16,029		)	6,250
Noncontrolling interest	—		—		—		284		(284		)	—
TOTAL SHAREHOLDERS' EQUITY	6,250		4,935		3,669		7,709		(16,313		)	6,250
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,254	$	5,882	$	4,222	$	16,623	$	(18,889	)	$	14,092

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 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	$	10	$	156	$	22	$	11,530	$	(360	)	$	11,358
Investment in subsidiaries	5,961		5,569		4,081		377		(15,988		)	—
Premiums receivable, net of commissions payable	—		—		—		833		(140		)	693
Ceded unearned premium reserve	—		—		—		1,266		(1,034		)	232
Deferred acquisition costs	—		—		—		176		(62		)	114
Reinsurance recoverable on unpaid losses	—		—		—		467		(398		)	69
Credit derivative assets	—		—		—		207		(126		)	81
Deferred tax asset, net	—		52		—		357		(133		)	276
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		1,261		—			1,261
Other	98		29		26		571		(264		)	460
TOTAL ASSETS	$	6,069	$	5,806	$	4,129	$	17,135	$	(18,595	)	$	14,544
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	5,143	$	(1,147	)	$	3,996
Loss and LAE reserve	—		—		—		1,537		(470		)	1,067
Long-term debt	—		842		445		13		—			1,300
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		572		(126		)	446
Deferred tax liabilities, net	—		—		91		—		(91		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		1,349		—			1,349
Other	6		82		15		622		(402		)	323
TOTAL LIABILITIES	6		1,014		551		9,536		(2,626		)	8,481
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	6,063		4,792		3,578		7,222		(15,592		)	6,063
Noncontrolling interest	—		—		—		377		(377		)	—
TOTAL SHAREHOLDERS’ EQUITY	6,063		4,792		3,578		7,599		(15,969		)	6,063
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,069	$	5,806	$	4,129	$	17,135	$	(18,595	)	$	14,544

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2016

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	222		$	(8	)	$	214
Net investment income	0			0			0			98			0			98
Net realized investment gains (losses)	0			—			0			10			0			10
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			24			0			24
Net unrealized gains (losses)	—			—			—			39			—			39
Net change in fair value of credit derivatives	—			—			—			63			0			63
Other	0			—			—			11			0			11
TOTAL REVENUES	0			0			0			404			(8		)	396
EXPENSES
Loss and LAE	—			—			—			104			(2		)	102
Amortization of deferred acquisition costs	—			—			—			7			(2		)	5
Interest expense	—			13			14			2			(4		)	25
Other operating expenses	8			0			0			55			0			63
TOTAL EXPENSES	8			13			14			168			(8		)	195
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(8		)	(13		)	(14		)	236			0			201
Total (provision) benefit for income taxes	—			4			5			(65		)	1			(55		)
Equity in net earnings of subsidiaries	154			140			113			14			(421		)	—
NET INCOME (LOSS)	$	146		$	131		$	104		$	185		$	(420	)	$	146
Less: noncontrolling interest	—			—			—			14			(14		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	146		$	131		$	104		$	171		$	(406	)	$	146

COMPREHENSIVE INCOME (LOSS)	$	210		$	166		$	125		$	248		$	(539	)	$	210

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 SIX MONTHS ENDED JUNE 30, 2016

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	414		$	(17	)	$	397
Net investment income	0			0			0			198			(1		)	197
Net realized investment gains (losses)	0			—			0			(2		)	(1		)	(3		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			32			0			32
Net unrealized gains (losses)	—			—			—			(29		)	—			(29		)
Net change in fair value of credit derivatives	—			—			—			3			0			3
Other	0			—			—			47			0			47
TOTAL REVENUES	0			0			0			660			(19		)	641
EXPENSES
Loss and LAE	—			—			—			197			(5		)	192
Amortization of deferred acquisition costs	—			—			—			14			(5		)	9
Interest expense	—			26			27			5			(7		)	51
Other operating expenses	16			0			1			107			(1		)	123
TOTAL EXPENSES	16			26			28			323			(18		)	375
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(16		)	(26		)	(28		)	337			(1		)	266
Total (provision) benefit for income taxes	—			9			10			(81		)	1			(61		)
Equity in net earnings of subsidiaries	221			190			190			23			(624		)	—
NET INCOME (LOSS)	$	205		$	173		$	172		$	279		$	(624	)	$	205
Less: noncontrolling interest	—			—			—			23			(23		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	205		$	173		$	172		$	256		$	(601	)	$	205

COMPREHENSIVE INCOME (LOSS)	$	351		$	246		$	217		$	426		$	(889	)	$	351

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 CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2016

(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	$	202		$	31		$	101		$	139		$	(520	)	$	(47	)
Cash flows from investing activities
Fixed-maturity securities:
Purchases	(4		)	(32		)	—			(474		)	—			(510		)
Sales	4			—			10			725			—			739
Maturities	—			21			—			624			—			645
Sales (purchases) of short-term investments, net	(31		)	(12		)	(11		)	(136		)	—			(190		)
Net proceeds from financial guaranty variable entities’ assets	—			—			—			556			—			556
Investment in subsidiary	—			—			—			4			(4		)	—
Cash restricted for CIFG acquisition	—			—			—			(451		)	—			(451		)
Other	—			—			—			(12		)	—			(12		)
Net cash flows provided by (used in) investing activities	(31		)	(23		)	(1		)	836			(4		)	777
Cash flows from financing activities
Return of capital	—			—			—			(4		)	4			—
Dividends paid	(35		)	(103		)	(103		)	(314		)	520			(35		)
Repurchases of common stock	(135		)	—			—			—			—			(135		)
Share activity under option and incentive plans	0			—			—			(1		)	—			(1		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(531		)	—			(531		)
Payment of long-term debt	—			—			—			(1		)	—			(1		)
Net cash flows provided by (used in) financing activities	(170		)	(103		)	(103		)	(851		)	524			(703		)
Effect of exchange rate changes	—			—			—			(3		)	—			(3		)
Increase (decrease) in cash	1			(95		)	(3		)	121			—			24
Cash at beginning of period	0			95			8			63			—			166
Cash at end of period	$	1		$	0		$	5		$	184		$	—		$	190

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
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		)
Net cash flows provided by (used in) financing activities	(324		)	(275		)	(128		)	(331		)	654			(404		)
Effect of exchange rate changes	—			—			—			0			—			0
Increase (decrease) in cash	—			—			—			—			—			0
Cash at beginning of period	0			0			4			71			—			75
Cash at end of period	$	0		$	0		$	4		$	71		$	—		$	75