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 SEPTEMBER 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	$	47	$	257	$	104	$	11,098	$	(399	)	$	11,107
Investment in subsidiaries	6,448		5,929		3,967		219		(16,563		)	—
Premiums receivable, net of commissions payable	—		—		—		1,078		(162		)	916
Ceded unearned premium reserve	—		—		—		959		(898		)	61
Deferred acquisition costs	—		—		—		142		(39		)	103
Deferred tax asset, net	—		—		—		148		(77		)	71
Intercompany receivable	—		—		—		60		(60		)	—
FG VIEs’ assets, at fair value	—		—		—		596		—			596
Dividends receivable from affiliate	78		—		—		—		(78		)	—
Other	25		109		56		1,380		(685		)	885
TOTAL ASSETS	$	6,598	$	6,295	$	4,127	$	15,680	$	(18,961	)	$	13,739
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	4,478	$	(940	)	$	3,538
Loss and LAE reserve	—		—		—		1,429		(282		)	1,147
Long-term debt	—		844		466		5		(66		)	1,249
Intercompany payable	—		60		—		300		(360		)	—
Credit derivative liabilities	—		—		—		268		(29		)	239
Deferred tax liabilities, net	—		30		51		—		(81		)	—
FG VIEs’ liabilities, at fair value	—		—		—		649		—			649
Dividends payable to affiliate	—		51		—		27		(78		)	—
Other	15		31		22		779		(513		)	334
TOTAL LIABILITIES	15		1,016		539		7,935		(2,349		)	7,156
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	6,583		5,279		3,588		7,526		(16,393		)	6,583
Noncontrolling interest	—		—		—		219		(219		)	—
TOTAL SHAREHOLDERS' EQUITY	6,583		5,279		3,588		7,745		(16,612		)	6,583
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,598	$	6,295	$	4,127	$	15,680	$	(18,961	)	$	13,739

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
Deferred tax asset, net	—		59		—		93		(54		)	98
Intercompany receivable	—		—		—		60		(60		)	—
FG VIEs’ assets, at fair value	—		—		—		700		—			700
Other	26		0		40		1,643		(748		)	961
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
Deferred tax liabilities, net	—		—		51		—		(51		)	—
FG VIEs’ liabilities, at fair value	—		—		—		757		—			757
Other	17		59		20		740		(481		)	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 SEPTEMBER 30, 2018

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	146		$	(4	)	$	142
Net investment income	0			2			0			100			(4		)	98
Net realized investment gains (losses)	—			0			—			(7		)	0			(7		)
Net change in fair value of credit derivatives	—			—			—			21			0			21
Other	3			0			—			72			(55		)	20
TOTAL REVENUES	3			2			0			332			(63		)	274
EXPENSES
Loss and LAE	—			—			—			18			(1		)	17
Amortization of deferred acquisition costs	—			—			—			5			(2		)	3
Interest expense	—			13			13			2			(5		)	23
Other operating expenses	10			6			(1		)	93			(52		)	56
TOTAL EXPENSES	10			19			12			118			(60		)	99
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(7		)	(17		)	(12		)	214			(3		)	175
Total (provision) benefit for income taxes	—			45			3			(58		)	(4		)	(14		)
Equity in net earnings of subsidiaries	168			111			108			7			(394		)	—
NET INCOME (LOSS)	$	161		$	139		$	99		$	163		$	(401	)	$	161
Less: noncontrolling interest	—			—			—			7			(7		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	161		$	139		$	99		$	156		$	(394	)	$	161

COMPREHENSIVE INCOME (LOSS)	$	87		$	76		$	61		$	92		$	(229	)	$	87

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	—			—			—			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 NINE MONTHS ENDED SEPTEMBER 30, 2018

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	434		$	(11	)	$	423
Net investment income	0			6			0			302			(10		)	298
Net realized investment gains (losses)	—			0			0			(14		)	0			(14		)
Net change in fair value of credit derivatives	—			—			—			103			0			103
Other	9			0			—			136			(167		)	(22		)
TOTAL REVENUES	9			6			0			961			(188		)	788
EXPENSES
Loss and LAE	—			—			—			48			(5		)	43
Amortization of deferred acquisition costs	—			—			—			16			(4		)	12
Interest expense	—			37			40			7			(13		)	71
Other operating expenses	30			9			0			293			(149		)	183
TOTAL EXPENSES	30			46			40			364			(171		)	309
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(21		)	(40		)	(40		)	597			(17		)	479
Total (provision) benefit for income taxes	—			50			9			(103		)	(2		)	(46		)
Equity in net earnings of subsidiaries	454			336			219			20			(1,029		)	—
NET INCOME (LOSS)	$	433		$	346		$	188		$	514		$	(1,048	)	$	433
Less: noncontrolling interest	—			—			—			20			(20		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	433		$	346		$	188		$	494		$	(1,028	)	$	433

COMPREHENSIVE INCOME (LOSS)	$	171		$	150		$	54		$	255		$	(459	)	$	171

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	—			—			—			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 CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 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	$	454		$	101		$	126		$	448		$	(777	)	$	352
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(76		)	(12		)	(1,462		)	72			(1,478		)
Sales	—			31			8			869			—			908
Maturities	—			28			0			718			—			746
Sales (purchases) of short-term investments, net	(11		)	60			(74		)	(66		)	—			(91		)
Net proceeds from FG VIEs’ assets	—			—			—			90			—			90
Return of capital from subsidiary	—			200			—			—			(200		)	—
Other	—			(15		)	—			34			—			19
Net cash flows provided by (used in) investing activities	(11		)	228			(78		)	183			(128		)	194
Cash flows from financing activities
Return of capital	—			—			—			—			—			—
Capital contribution	—			—			—			—			—			—
Dividends paid	(55		)	(362		)	(50		)	(365		)	777			(55		)
Repurchases of common stock	(380		)	—			—			(200		)	200			(380		)
Repurchases of common stock to pay withholding taxes	(13		)	—			—			—			—			(13		)
Net paydowns of FG VIEs’ liabilities	—			—			—			(90		)	—			(90		)
Paydown of long-term debt	—			—			—			(1		)	(72		)	(73		)
Proceeds from options exercises	5			—			—			—			—			5
Net cash flows provided by (used in) financing activities	(443		)	(362		)	(50		)	(656		)	905			(606		)
Effect of exchange rate changes	—			0			—			(2		)	—			(2		)
Increase (decrease) in cash and restricted cash	0			(33		)	(2		)	(27		)	—			(62		)
Cash and restricted cash at beginning of period	0			33			2			109			—			144
Cash and restricted cash at end of period	$	0		$	0		$	0		$	82		$	—		$	82

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 FG VIEs’ 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 FG VIEs’ liabilities	—			—			—			(124		)	—			(124		)
Paydown 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