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 their subsidiaries on the equity method of accounting. The following tables reflect transfers of businesses between entities within the consolidated group consistently for all prior periods presented.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JUNE 30, 2018

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	33	$	386	$	21	$	11,358	$	(375	)	$	11,423
Investment in subsidiaries	6,538		5,893		3,991		220		(16,642		)	—
Premiums receivable, net of commissions payable	—		—		—		1,127		(195		)	932
Ceded unearned premium reserve	—		—		—		986		(920		)	66
Deferred acquisition costs	—		—		—		143		(41		)	102
Intercompany receivable	—		—		—		60		(60		)	—
FG VIEs’ assets, at fair value	—		—		—		627		—			627
Dividend receivable from affiliate	51		—		—		—		(51		)	—
Other	24		58		50		1,554		(704		)	982
TOTAL ASSETS	$	6,646	$	6,337	$	4,062	$	16,075	$	(18,988	)	$	14,132
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	4,610	$	(975	)	$	3,635
Loss and LAE reserve	—		—		—		1,648		(321		)	1,327
Long-term debt	—		844		464		5		(49		)	1,264
Intercompany payable	—		60		—		300		(360		)	—
Credit derivative liabilities	—		—		—		288		(30		)	258
FG VIEs’ liabilities, at fair value	—		—		—		679		—			679
Dividend payable to affiliate	—		51		—		—		(51		)	—
Other	12		39		70		731		(517		)	335
TOTAL LIABILITIES	12		994		534		8,261		(2,303		)	7,498
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	6,634		5,343		3,528		7,594		(16,465		)	6,634
Noncontrolling interest	—		—		—		220		(220		)	—
TOTAL SHAREHOLDERS' EQUITY	6,634		5,343		3,528		7,814		(16,685		)	6,634
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,646	$	6,337	$	4,062	$	16,075	$	(18,988	)	$	14,132

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 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	$	36	$	319	$	28	$	11,484	$	(328	)	$	11,539
Investment in subsidiaries	6,794		6,126		4,048		216		(17,184		)	—
Premiums receivable, net of commissions payable	—		—		—		1,074		(159		)	915
Ceded unearned premium reserve	—		—		—		1,002		(883		)	119
Deferred acquisition costs	—		—		—		144		(43		)	101
Intercompany receivable	—		—		—		60		(60		)	—
FG VIEs’ assets, at fair value	—		—		—		700		—			700
Other	26		59		40		1,736		(802		)	1,059
TOTAL ASSETS	$	6,856	$	6,504	$	4,116	$	16,416	$	(19,459	)	$	14,433
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	4,423	$	(948	)	$	3,475
Loss and LAE reserve	—		—		—		1,793		(349		)	1,444
Long-term debt	—		843		461		6		(18		)	1,292
Intercompany payable	—		60		—		300		(360		)	—
Credit derivative liabilities	—		—		—		308		(37		)	271
FG VIEs’ liabilities, at fair value	—		—		—		757		—			757
Other	17		59		71		740		(532		)	355
TOTAL LIABILITIES	17		962		532		8,327		(2,244		)	7,594
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	6,839		5,542		3,584		7,873		(16,999		)	6,839
Noncontrolling interest	—		—		—		216		(216		)	—
TOTAL SHAREHOLDERS’ EQUITY	6,839		5,542		3,584		8,089		(17,215		)	6,839
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,856	$	6,504	$	4,116	$	16,416	$	(19,459	)	$	14,433

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2018

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	139		$	(3	)	$	136
Net investment income	0			2			0			100			(3		)	99
Net realized investment gains (losses)	—			0			—			(2		)	0			(2		)
Net change in fair value of credit derivatives	—			—			—			48			0			48
Other	3			0			—			(9		)	(54		)	(60		)
TOTAL REVENUES	3			2			0			276			(60		)	221
EXPENSES
Loss and LAE	—			—			—			46			(2		)	44
Amortization of deferred acquisition costs	—			—			—			5			(1		)	4
Interest expense	—			12			14			2			(4		)	24
Other operating expenses	10			0			1			95			(44		)	62
TOTAL EXPENSES	10			12			15			148			(51		)	134
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(7		)	(10		)	(15		)	128			(9		)	87
Total (provision) benefit for income taxes	—			2			3			(20		)	3			(12		)
Equity in net earnings of subsidiaries	82			64			9			6			(161		)	—
NET INCOME (LOSS)	$	75		$	56		$	(3	)	$	114		$	(167	)	$	75
Less: noncontrolling interest	—			—			—			6			(6		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	75		$	56		$	(3	)	$	108		$	(161	)	$	75

COMPREHENSIVE INCOME (LOSS)	$	13		$	7		$	(53	)	$	52		$	(6	)	$	13

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2017

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	166		$	(4	)	$	162
Net investment income	0			1			0			101			(1		)	101
Net realized investment gains (losses)	—			0			0			30			(15		)	15
Net change in fair value of credit derivatives	—			—			—			(6		)	0			(6		)
Other	2			—			—			83			(49		)	36
TOTAL REVENUES	2			1			0			374			(69		)	308
EXPENSES
Loss and LAE	—			—			—			40			32			72
Amortization of deferred acquisition costs	—			—			—			6			(2		)	4
Interest expense	—			12			14			3			(4		)	25
Other operating expenses	10			1			0			89			(43		)	57
TOTAL EXPENSES	10			13			14			138			(17		)	158
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(8		)	(12		)	(14		)	236			(52		)	150
Total (provision) benefit for income taxes	—			3			6			(24		)	18			3
Equity in net earnings of subsidiaries	161			138			118			6			(423		)	—
NET INCOME (LOSS)	$	153		$	129		$	110		$	218		$	(457	)	$	153
Less: noncontrolling interest	—			—			—			6			(6		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	153		$	129		$	110		$	212		$	(451	)	$	153

COMPREHENSIVE INCOME (LOSS)	$	262		$	224		$	124		$	293		$	(641	)	$	262

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2018

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	288		$	(7	)	$	281
Net investment income	0			4			0			202			(6		)	200
Net realized investment gains (losses)	—			0			0			(7		)	0			(7		)
Net change in fair value of credit derivatives	—			—			—			82			0			82
Other	6			0			—			64			(112		)	(42		)
TOTAL REVENUES	6			4			0			629			(125		)	514
EXPENSES
Loss and LAE	—			—			—			30			(4		)	26
Amortization of deferred acquisition costs	—			—			—			11			(2		)	9
Interest expense	—			24			27			5			(8		)	48
Other operating expenses	20			3			1			200			(97		)	127
TOTAL EXPENSES	20			27			28			246			(111		)	210
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(14		)	(23		)	(28		)	383			(14		)	304
Total (provision) benefit for income taxes	—			5			6			(45		)	2			(32		)
Equity in net earnings of subsidiaries	286			225			111			13			(635		)	—
NET INCOME (LOSS)	$	272		$	207		$	89		$	351		$	(647	)	$	272
Less: noncontrolling interest	—			—			—			13			(13		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	272		$	207		$	89		$	338		$	(634	)	$	272

COMPREHENSIVE INCOME (LOSS)	$	84		$	74		$	(7	)	$	163		$	(230	)	$	84

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2017

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	333		$	(7	)	$	326
Net investment income	0			1			0			224			(2		)	223
Net realized investment gains (losses)	—			0			0			62			(15		)	47
Net change in fair value of credit derivatives	—			—			—			48			0			48
Bargain purchase gain and settlement of pre-existing relationships	—			—			—			58			—			58
Other	5			—			—			225			(97		)	133
TOTAL REVENUES	5			1			0			950			(121		)	835
EXPENSES
Loss and LAE	—			—			—			51			80			131
Amortization of deferred acquisition costs	—			—			—			11			(3		)	8
Interest expense	—			24			27			5			(7		)	49
Other operating expenses	20			7			1			195			(98		)	125
TOTAL EXPENSES	20			31			28			262			(28		)	313
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(15		)	(30		)	(28		)	688			(93		)	522
Total (provision) benefit for income taxes	—			9			11			(100		)	28			(52		)
Equity in net earnings of subsidiaries	485			337			254			14			(1,090		)	—
NET INCOME (LOSS)	$	470		$	316		$	237		$	602		$	(1,155	)	$	470
Less: noncontrolling interest	—			—			—			14			(14		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	470		$	316		$	237		$	588		$	(1,141	)	$	470

COMPREHENSIVE INCOME (LOSS)	$	636		$	468		$	316		$	730		$	(1,514	)	$	636

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2018

(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	$	296		$	88		$	43		$	524		$	(507	)	$	444
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(27		)	(12		)	(863		)	23			(879		)
Sales	—			11			2			579			—			592
Maturities	—			10			0			523			—			533
Sales (purchases) of short-term investments, net	3			(78		)	16			(245		)	—			(304		)
Net proceeds from FG VIEs’ assets	—			—			—			60			—			60
Proceeds from stock redemption and return of capital from subsidiaries	—			200			—			—			(200		)	—
Other	—			(15		)	—			(1		)	—			(16		)
Net cash flows provided by (used in) investing activities	3			101			6			53			(177		)	(14		)
Cash flows from financing activities
Return of capital	—			—			—			—			—			—
Capital contribution	—			—			—			—			—			—
Dividends paid	(37		)	(222		)	(50		)	(235		)	507			(37		)
Repurchases of common stock	(250		)	—			—			(200		)	200			(250		)
Repurchases of common stock to pay withholding taxes	(13		)	—			—			—			—			(13		)
Net paydowns of FG VIEs’ liabilities	—			—			—			(61		)	—			(61		)
Paydown of long-term debt	—			—			—			(1		)	(23		)	(24		)
Proceeds from options exercises	1			—			—			—			—			1
Net cash flows provided by (used in) financing activities	(299		)	(222		)	(50		)	(497		)	684			(384		)
Effect of exchange rate changes	—			—			—			(1		)	—			(1		)
Increase (decrease) in cash and restricted cash	0			(33		)	(1		)	79			—			45
Cash and restricted cash at beginning of period	0			33			2			109			—			144
Cash and restricted cash at end of period	$	0		$	0		$	1		$	188		$	—		$	189

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 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	$	387		$	109		$	55		$	264		$	(617	)	$	198
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(54		)	(5		)	(1,089		)	5			(1,143		)
Sales	—			79			6			693			—			778
Maturities	—			7			0			455			—			462
Sales (purchases) of short-term investments, net	9			206			(8		)	(187		)	—			20
Net proceeds from FG VIEs’ assets	—			—			—			81			—			81
Investment in subsidiaries	—			(28		)	—			(139		)	167			—
Proceeds from sale of subsidiaries	—			—			—			139			(139		)	—
Acquisition of MBIA UK, net of cash acquired	—			—			—			95			—			95
Other	—			—			—			68			—			68
Net cash flows provided by (used in) investing activities	9			210			(7		)	116			33			361
Cash flows from financing activities
Capital contribution	—			—			25			3			(28		)	—
Dividends paid	(36		)	(320		)	(73		)	(224		)	617			(36		)
Repurchases of common stock	(351		)	—			—			—			—			(351		)
Repurchases of common stock to pay withholding taxes	(12		)	—			—			—			—			(12		)
Net paydowns of FG VIEs’ liabilities	—			—			—			(86		)	—			(86		)
Paydown of long-term debt	—			—			—			(1		)	(5		)	(6		)
Proceeds from options exercises	3			—			—			—			—			3
Net cash flows provided by (used in) financing activities	(396		)	(320		)	(48		)	(308		)	584			(488		)
Effect of exchange rate changes	—			—			—			3			—			3
Increase (decrease) in cash and restricted cash	—			(1		)	—			75			—			74
Cash and restricted cash at beginning of period	0			1			0			126			—			127
Cash and restricted cash at end of period	$	0		$	0		$	0		$	201		$	—		$	201