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 (please refer to Note 15, Long Term Debt and Credit Facilities). The information for AGL, AGUS and AGMH presents its subsidiaries on the equity method of accounting. The following tables reflect transfers of businesses between entities within the consolidated group that occurred in the current reporting period consistently for all prior periods presented.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2017

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	47	$	143	$	24	$	11,776	$	(327	)	$	11,663
Investment in subsidiaries	6,799		6,257		4,216		208		(17,480		)	—
Premiums receivable, net of commissions payable	—		—		—		1,076		(154		)	922
Ceded unearned premium reserve	—		—		—		1,009		(901		)	108
Deferred acquisition costs	—		—		—		150		(45		)	105
Reinsurance recoverable on unpaid losses	—		—		—		394		(355		)	39
Credit derivative assets	—		—		—		50		(47		)	3
Deferred tax asset, net	—		76		—		153		(94		)	135
Intercompany receivable	—		—		—		70		(70		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		707		—			707
Dividend receivable from affiliate	25		—		—		—		(25		)	—
Other	22		28		51		1,100		(234		)	967
TOTAL ASSETS	$	6,893	$	6,504	$	4,291	$	16,693	$	(19,732	)	$	14,649
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	4,565	$	(968	)	$	3,597
Loss and LAE reserve	—		—		—		1,646		(320		)	1,326
Long-term debt	—		843		459		8		(18		)	1,292
Intercompany payable	—		70		—		300		(370		)	—
Credit derivative liabilities	—		—		—		352		(47		)	305
Deferred tax liabilities, net	—		—		87		—		(87		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		768		—			768
Dividend payable to affiliate	—		25		—		—		(25		)	—
Other	15		19		22		815		(388		)	483
TOTAL LIABILITIES	15		957		568		8,454		(2,223		)	7,771
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	6,878		5,547		3,723		8,031		(17,301		)	6,878
Noncontrolling interest	—		—		—		208		(208		)	—
TOTAL SHAREHOLDERS' EQUITY	6,878		5,547		3,723		8,239		(17,509		)	6,878
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,893	$	6,504	$	4,291	$	16,693	$	(19,732	)	$	14,649

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 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	$	36	$	384	$	22	$	11,029	$	(368	)	$	11,103
Investment in subsidiaries	6,164		5,696		3,799		296		(15,955		)	—
Premiums receivable, net of commissions payable	—		—		—		699		(123		)	576
Ceded unearned premium reserve	—		—		—		1,099		(893		)	206
Deferred acquisition costs	—		—		—		156		(50		)	106
Reinsurance recoverable on unpaid losses	—		—		—		484		(404		)	80
Credit derivative assets	—		—		—		69		(56		)	13
Deferred tax asset, net	—		16		—		597		(116		)	497
Intercompany receivable	—		—		—		70		(70		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		876		—			876
Dividend receivable from affiliate	300		—		—		—		(300		)	—
Other	11		78		26		801		(222		)	694
TOTAL ASSETS	$	6,511	$	6,174	$	3,847	$	16,176	$	(18,557	)	$	14,151
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	4,488	$	(977	)	$	3,511
Loss and LAE reserve	—		—		—		1,596		(469		)	1,127
Long-term debt	—		843		453		10		—			1,306
Intercompany payable	—		70		—		300		(370		)	—
Credit derivative liabilities	—		—		—		458		(56		)	402
Deferred tax liabilities, net	—		—		88		—		(88		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		958		—			958
Dividend payable to affiliate	—		300		—		—		(300		)	—
Other	7		3		14		665		(346		)	343
TOTAL LIABILITIES	7		1,216		555		8,475		(2,606		)	7,647
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	6,504		4,958		3,292		7,405		(15,655		)	6,504
Noncontrolling interest	—		—		—		296		(296		)	—
TOTAL SHAREHOLDERS’ EQUITY	6,504		4,958		3,292		7,701		(15,951		)	6,504
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,511	$	6,174	$	3,847	$	16,176	$	(18,557	)	$	14,151

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	190		$	(4	)	$	186
Net investment income	0			0			0			101			(2		)	99
Net realized investment gains (losses)	—			0			0			(9		)	16			7
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			(1		)	0			(1		)
Net unrealized gains (losses)	—			—			—			59			—			59
Net change in fair value of credit derivatives	—			—			—			58			0			58
Other	3			—			—			302			(32		)	273
TOTAL REVENUES	3			0			0			642			(22		)	623
EXPENSES
Loss and LAE	—			—			—			250			(27		)	223
Amortization of deferred acquisition costs	—			—			—			8			(3		)	5
Interest expense	—			12			13			3			(4		)	24
Other operating expenses	10			1			0			91			(44		)	58
TOTAL EXPENSES	10			13			13			352			(78		)	310
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(7		)	(13		)	(13		)	290			56			313
Total (provision) benefit for income taxes	—			4			4			(94		)	(19		)	(105		)
Equity in net earnings of subsidiaries	215			237			178			8			(638		)	—
NET INCOME (LOSS)	$	208		$	228		$	169		$	204		$	(601	)	$	208
Less: noncontrolling interest	—			—			—			8			(8		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	208		$	228		$	169		$	196		$	(593	)	$	208

COMPREHENSIVE INCOME (LOSS)	$	219		$	237		$	178		$	274		$	(689	)	$	219

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	239		$	(8	)	$	231
Net investment income	0			0			0			95			(1		)	94
Net realized investment gains (losses)	0			3			0			(2		)	(3		)	(2		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			15			0			15
Net unrealized gains (losses)	—			—			—			6			—			6
Net change in fair value of credit derivatives	—			—			—			21			0			21
Bargain purchase gain and settlement of pre-existing relationship	—			—			—			257			2			259
Other	0			—			—			(37		)	—			(37		)
TOTAL REVENUES	0			3			0			573			(10		)	566
EXPENSES
Loss and LAE	—			—			—			(15		)	6			(9		)
Amortization of deferred acquisition costs	—			—			—			9			(5		)	4
Interest expense	—			13			13			3			(3		)	26
Other operating expenses	7			1			1			58			(2		)	65
TOTAL EXPENSES	7			14			14			55			(4		)	86
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(7		)	(11		)	(14		)	518			(6		)	480
Total (provision) benefit for income taxes	—			4			5			(13		)	3			(1		)
Equity in net earnings of subsidiaries	486			433			82			11			(1,012		)	—
NET INCOME (LOSS)	$	479		$	426		$	73		$	516		$	(1,015	)	$	479
Less: noncontrolling interest	—			—			—			11			(11		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	479		$	426		$	73		$	505		$	(1,004	)	$	479

COMPREHENSIVE INCOME (LOSS)	$	454		$	414		$	51		$	497		$	(962	)	$	454

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	523		$	(11	)	$	512
Net investment income	0			1			0			325			(4		)	322
Net realized investment gains (losses)	—			0			0			53			1			54
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			19			0			19
Net unrealized gains (losses)	—			—			—			87			—			87
Net change in fair value of credit derivatives	—			—			—			106			0			106
Bargain purchase gain and settlement of pre-existing relationships	—			—			—			58			0			58
Other	8			—			—			527			(129		)	406
TOTAL REVENUES	8			1			0			1,592			(143		)	1,458
EXPENSES
Loss and LAE	—			—			—			301			53			354
Amortization of deferred acquisition costs	—			—			—			19			(6		)	13
Interest expense	—			36			40			8			(11		)	73
Other operating expenses	30			8			1			286			(142		)	183
TOTAL EXPENSES	30			44			41			614			(106		)	623
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(22		)	(43		)	(41		)	978			(37		)	835
Total (provision) benefit for income taxes	—			13			15			(194		)	9			(157		)
Equity in net earnings of subsidiaries	700			574			422			22			(1,718		)	—
NET INCOME (LOSS)	$	678		$	544		$	396		$	806		$	(1,746	)	$	678
Less: noncontrolling interest	—			—			—			22			(22		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	678		$	544		$	396		$	784		$	(1,724	)	$	678

COMPREHENSIVE INCOME (LOSS)	$	855		$	705		$	484		$	1,004		$	(2,193	)	$	855

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	653		$	(25	)	$	628
Net investment income	0			0			0			293			(2		)	291
Net realized investment gains (losses)	0			3			0			(4		)	(4		)	(5		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			47			—			47
Net unrealized gains (losses)	—			—			—			(23		)	—			(23		)
Net change in fair value of credit derivatives	—			—			—			24			—			24
Bargain purchase gain and settlement of pre-existing relationship	—			—			—			257			2			259
Other	0			0			0			10			0			10
TOTAL REVENUES	0			3			0			1,233			(29		)	1,207
EXPENSES
Loss and LAE	—			—			—			182			1			183
Amortization of deferred acquisition costs	—			—			—			23			(10		)	13
Interest expense	—			39			40			8			(10		)	77
Other operating expenses	23			1			2			165			(3		)	188
TOTAL EXPENSES	23			40			42			378			(22		)	461
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(23		)	(37		)	(42		)	855			(7		)	746
Total (provision) benefit for income taxes	—			13			15			(94		)	4			(62		)
Equity in net earnings of subsidiaries	707			623			272			34			(1,636		)	—
NET INCOME (LOSS)	$	684		$	599		$	245		$	795		$	(1,639	)	$	684
Less: noncontrolling interest	—			—			—			34			(34		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	684		$	599		$	245		$	761		$	(1,605	)	$	684

COMPREHENSIVE INCOME (LOSS)	$	805		$	660		$	261		$	923		$	(1,844	)	$	805

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(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	$	503		$	175		$	105		$	469		$	(898	)	$	354
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(75		)	(15		)	(1,552		)	27			(1,615		)
Sales	—			112			12			1,004			—			1,128
Maturities	—			7			0			682			—			689
Sales (purchases) of short-term investments, net	(11		)	218			3			(450		)	—			(240		)
Net proceeds from financial guaranty variable entities’ assets	—			—			—			117			—			117
Investment in subsidiaries	—			(28		)	—			(69		)	97			—
Proceeds from sale of subsidiaries	—			—			—			139			(139		)	—
Acquisition of MBIA UK, net of cash acquired	—			—			—			95			—			95
Other	—			—			—			58			—			58
Net cash flows provided by (used in) investing activities	(11		)	234			—			24			(15		)	232
Cash flows from financing activities
Return of capital	—			—			—			(70		)	70			—
Capital contribution	—			—			25			3			(28		)	—
Dividends paid	(53		)	(390		)	(128		)	(380		)	898			(53		)
Repurchases of common stock	(431		)	—			—			—			—			(431		)
Repurchases of common stock to pay withholding taxes	(13		)	—			—			—			—			(13		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(124		)	—			(124		)
Repayment/ extinguishment of long-term debt	—			—			—			(2		)	(27		)	(29		)
Proceeds from options exercises	5			—			—			—			—			5
Net cash flows provided by (used in) financing activities	(492		)	(390		)	(103		)	(573		)	913			(645		)
Effect of exchange rate changes	—			—			—			4			—			4
Increase (decrease) in cash and restricted cash	0			19			2			(76		)	—			(55		)
Cash and restricted cash at beginning of period	0			1			0			126			—			127
Cash and restricted cash at end of period	$	0		$	20		$	2		$	50		$	—		$	72

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 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	$	288		$	171		$	159		$	3		$	(810	)	$	(189	)
Cash flows from investing activities
Fixed-maturity securities:
Purchases	(4		)	(44		)	(10		)	(970		)	—			(1,028		)
Sales	4			—			12			861			—			877
Maturities	—			23			—			838			—			861
Sales (purchases) of short-term investments, net	(49		)	(3		)	(1		)	133			—			80
Net proceeds from financial guaranty variable entities’ assets	—			—			—			590			—			590
Investment in subsidiaries	—			—			—			4			(4		)	—
Acquisition of CIFG, net of cash acquired	—			—			—			(442		)	7			(435		)
Other	—			7			—			(12		)	(7		)	(12		)
Net cash flows provided by (used in) investing activities	(49		)	(17		)	1			1,002			(4		)	933
Cash flows from financing activities
Return of capital	—			—			—			(4		)	4			—
Dividends paid	(52		)	(223		)	(158		)	(429		)	810			(52		)
Repurchases of common stock	(190		)	—			—			—			—			(190		)
Share repurchases to pay withholding taxes	(2		)	—			—			—			—			(2		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(567		)	—			(567		)
Payment of long-term debt	—			—			—			(2		)	—			(2		)
Proceeds from options exercises	6			—			—			—			—			6
Net cash flows provided by (used in) financing activities	(238		)	(223		)	(158		)	(1,002		)	814			(807		)
Effect of exchange rate changes	—			—			—			(4		)	—			(4		)
Increase (decrease) in cash and restricted cash	1			(69		)	2			(1		)	—			(67		)
Cash and restricted cash at beginning of period	0			95			8			63			—			166
Cash and restricted cash at end of period	$	1		$	26		$	10		$	62		$	—		$	99