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Contracts Accounted for as Insurance (Tables)
 12 Months Ended
Dec. 31, 2018
Insurance [Abstract]  
Net Earned Premiums
Net Earned Premiums
 
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Financial guaranty:
 
 
 
 
 
Scheduled net earned premiums
$
367

 
$
385

 
$
381

Accelerations from refundings and terminations
159

 
286

 
469

Accretion of discount on net premiums receivable
18

 
17

 
14

Financial guaranty insurance net earned premiums
544

 
688

 
864

Non-financial guaranty net earned premiums
4

 
2

 
—

  Net earned premiums (1)
$
548

 
$
690

 
$
864

 ___________________
(1)
Excludes $12 million, $15 million and $16 million for the years ended December 31, 2018, 2017 and 2016, respectively, related to consolidated FG VIEs.
Gross Premium Receivable, Net of Commissions on Assumed Business Roll Forward
Expected Collections of
Financial Guaranty Insurance Gross Premiums Receivable,
Net of Commissions on Assumed Business
(Undiscounted)

 
As of December 31, 2018
 
(in millions)
2019 (January 1 – March 31)
$
33

2019 (April 1 – June 30)
32

2019 (July 1 – September 30)
21

2019 (October 1 – December 31)
18

2020
98

2021
79

2022
79

2023
66

2024-2028
278

2029-2033
182

2034-2038
98

After 2038
100

Total (1)
$
1,084

____________________
(1)
Excludes expected cash collections on consolidated FG VIEs of $11 million.
Gross Premium Receivable,
Net of Commissions on Assumed Business
Roll Forward

 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Beginning of year
$
915

 
$
576

 
$
693

Less: Non-financial guaranty insurance premium receivable
1

 
—

 
—

FG insurance premiums receivable
914

 
576

 
693

Premiums receivable from acquisitions (see Note 2)
—

 
270

 
18

Gross written premiums on new business, net of commissions (1)
610

 
301

 
193

Gross premiums received, net of commissions (2)
(577
)
 
(301
)
 
(258
)
Adjustments:
 
 
 
 
 
Changes in the expected term
(8
)
 
(8
)
 
(38
)
Accretion of discount, net of commissions on assumed business
9

 
12

 
9

Foreign exchange translation and remeasurement (3)
(35
)
 
64

 
(41
)
Cancellation of assumed reinsurance
(10
)
 
—

 
—

FG insurance premium receivable (4)
903

 
914

 
576

Non-financial guaranty insurance premium receivable
1

 
1

 
—

December 31,
$
904

 
$
915

 
$
576

____________________
(1)
For transactions where one of the Company's financial guaranty contracts is replaced by another of the Company's insurance subsidiary's contracts, gross written premiums in this table represents only the incremental amount in excess of the original gross written premiums. The year ended December 31, 2018 includes $330 million of gross written premiums assumed from SGI on June 1, 2018. See Note 2, Assumption of Insured Portfolio and Business Combinations.

(2)
The year ended December 31, 2018 includes $275 million of cash received from SGI on June 1, 2018.

(3)
Includes foreign exchange gain (loss) on remeasurement recorded in the consolidated statements of operations of $(33) million in 2018, $61 million in 2017, $(36) million in 2016. The remaining foreign exchange translation was recorded in OCI prior to the date of the Combination.

(4)
Excludes $9 million, $10 million and $11 million as of December 31, 2018, 2017 and 2016, respectively, related to consolidated FG VIEs.
Schedule of Net Earned Premiums
Scheduled Financial Guaranty Insurance Net Earned Premiums
 
 
As of December 31, 2018
 
(in millions)
2019 (January 1 – March 31)
$
87

2019 (April 1 – June 30)
84

2019 (July 1 – September 30)
82

2019 (October 1 – December 31)
79

Subtotal 2019
332

2020
302

2021
275

2022
250

2023
229

2024-2028
898

2029-2033
603

2034-2038
339

After 2038
284

Net deferred premium revenue (1)
3,512

Future accretion
181

Total future net earned premiums
$
3,693

 ____________________
(1)
Excludes net earned premiums on consolidated FG VIEs of $65 million and non-financial guaranty business net earned premium of $12 million.
Selected Information for Policies Paid in Installments
Selected Information for Financial Guaranty Insurance
Policies Paid in Installments

 
As of
December 31, 2018
 
As of
December 31, 2017
 
(dollars in millions)
Premiums receivable, net of commission payable
$
903

 
$
914

Gross deferred premium revenue
1,313

 
1,205

Weighted-average risk-free rate used to discount premiums
2.3
%
 
2.3
%
Weighted-average period of premiums receivable (in years)
9.1

 
9.2
Rollforward of Deferred Acquisition Costs
Rollforward of
Deferred Acquisition Costs

 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Beginning of year
$
101

 
$
106

 
$
114

DAC adjustments from acquisitions (see Note 2)
—

 
(2
)
 
—

Costs deferred during the period
19

 
16

 
11

Costs amortized during the period
(15
)
 
(19
)
 
(19
)
December 31,
$
105

 
$
101

 
$
106
Loss and LAE Reserve and Salvage and Subrogation Recoverable Net of Reinsurance Insurance Contracts

Net Reserve (Salvage)

 
As of
December 31, 2018
 
As of
December 31, 2017
 
(in millions)
Public finance:
 
 
 
U.S. public finance
$
612

 
$
901

Non-U.S. public finance
14

 
21

Public finance
626

 
922

Structured finance:
 
 
 
U.S. RMBS (1)
21

 
(114
)
Other structured finance
30

 
40

Structured finance
51

 
(74
)
Subtotal
677

 
848

Other payable (recoverable)
(3
)
 
(4
)
Total
$
674

 
$
844
Components of Net Reserves (Salvage) Insurance Contracts
Components of Net Reserves (Salvage)

 
As of
December 31, 2018
 
As of
December 31, 2017
 
(in millions)
Loss and LAE reserve
$
1,177

 
$
1,444

Reinsurance recoverable on unpaid losses (1)
(34
)
 
(44
)
Loss and LAE reserve, net
1,143

 
1,400

Salvage and subrogation recoverable
(490
)
 
(572
)
Salvage and subrogation payable (2)
24

 
20

Other payable (recoverable) (1)
(3
)
 
(4
)
Salvage and subrogation recoverable, net and other recoverable
(469
)
 
(556
)
Net reserves (salvage)
$
674

 
$
844

____________________
(1)          Recorded as a component of other assets in consolidated balance sheets.

(2)          Represents ceded reinsurance amounts recorded as a component of other liabilities in consolidated balance sheets.
Reconciliation of Net Expected Loss to be Paid and Net Expected Loss to be Expensed Financial Guaranty Insurance Contracts
Reconciliation of Net Expected Loss to be Paid and
Net Expected Loss to be Expensed
Financial Guaranty Insurance Contracts
 
 
As of
December 31, 2018
 
(in millions)
Net expected loss to be paid - financial guaranty insurance (1)
$
1,109

Contra-paid, net
71

Salvage and subrogation recoverable, net, and other recoverable
469

Loss and LAE reserve - financial guaranty insurance contracts, net of reinsurance
(1,142
)
Net expected loss to be expensed (present value) (2)
$
507

____________________
(1)
See "Net Expected Loss to be Paid (Recovered) by Accounting Model" table in Note 5, Expected Loss to be Paid.

(2)
Excludes $42 million as of December 31, 2018 related to consolidated FG VIEs.
Net Expected Loss to be Expensed Insurance Contracts
Net Expected Loss to be Expensed
Financial Guaranty Insurance Contracts
 
 
As of
December 31, 2018
 
(in millions)
2019 (January 1 – March 31)
$
8

2019 (April 1 – June 30)
10

2019 (July 1 – September 30)
9

2019 (October 1 – December 31)
9

Subtotal 2019
36

2020
37

2021
39

2022
40

2023
38

2024-2028
156

2029-2033
104

2034-2038
47

After 2038
10

Net expected loss to be expensed
507

Future accretion
88

Total expected future loss and LAE
$
595

 
Loss and LAE Reported on the Consolidated Statements of Operations
Loss and LAE
Reported on the
Consolidated Statements of Operations
 
 
Loss (Benefit)
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Public finance:
 
 
 
 
 
U.S. public finance
$
90

 
$
553

 
$
307

Non-U.S. public finance
(7
)
 
(4
)
 
(3
)
Public finance
83

 
549

 
304

Structured finance:
 
 
 
 
 
U.S. RMBS (1)
(15
)
 
(113
)
 
30

Other structured finance
(4
)
 
(48
)
 
(39
)
Structured finance
(19
)
 
(161
)
 
(9
)
Loss and LAE
$
64

 
$
388

 
$
295


____________________
(1)
Excludes a benefit of $3 million, a loss of $7 million and a loss of $7 million for the years ended December 31, 2018, 2017 and 2016, respectively, related to consolidated FG VIEs.
BIG Net Par Outstanding and Number of Risks
Financial Guaranty Portfolio
BIG Net Par Outstanding
and Number of Risks
As of December 31, 2018

 
 
Net Par Outstanding
 
Number of Risks(2)
Description
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
 
(dollars in millions)
BIG:
 
 

 
 

 
 

 
 

 
 

 
 

Category 1
 
$
2,981

 
$
77

 
$
3,058

 
128

 
6

 
134

Category 2
 
932

 
5

 
937

 
39

 
1

 
40

Category 3
 
6,090

 
75

 
6,165

 
145

 
8

 
153

Total BIG
 
$
10,003

 
$
157

 
$
10,160

 
312

 
15

 
327

Financial Guaranty Portfolio
BIG Net Par Outstanding
and Number of Risks
As of December 31, 2017
 
 
 
Net Par Outstanding
 
Number of Risks(2)
Description
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
 
(dollars in millions)
BIG:
 
 

 
 

 
 

 
 

 
 

 
 

Category 1
 
$
4,301

 
$
227

 
$
4,528

 
139

 
7

 
146

Category 2
 
1,344

 
17

 
1,361

 
46

 
3

 
49

Category 3
 
6,255

 
94

 
6,349

 
150

 
9

 
159

Total BIG
 
$
11,900

 
$
338

 
$
12,238

 
335

 
19

 
354

_____________________
(1)    Includes net par outstanding for VIEs.
(2)
A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments.
Financial Guaranty Insurance
BIG Transaction Loss Summary
As of December 31, 2018
 
 
BIG Categories
 
BIG 1
 
BIG 2
 
BIG 3
 
Total
BIG, Net
 
Effect of
Consolidating
FG VIEs
 
Total
 
Gross
 
Ceded
 
Gross
 
Ceded
 
Gross
 
Ceded
 
 
 
 
(dollars in millions)
Number of risks (1)
128

 
(8
)
 
39

 
(1
)
 
145

 
(7
)
 
312

 
—

 
312

Remaining weighted-average contract period (in years)
7.9

 
6.5

 
13.2

 
2.1

 
10.1

 
9.1

 
9.8

 
—

 
9.8

Outstanding exposure:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Principal
$
3,052

 
$
(71
)
 
$
938

 
$
(6
)
 
$
6,249

 
$
(159
)
 
$
10,003

 
$
—

 
$
10,003

Interest
1,319

 
(29
)
 
592

 
(1
)
 
3,140

 
(72
)
 
4,949

 
—

 
4,949

Total (2)
$
4,371

 
$
(100
)
 
$
1,530

 
$
(7
)
 
$
9,389

 
$
(231
)
 
$
14,952

 
$
—

 
$
14,952

Expected cash outflows (inflows)
$
98

 
$
(5
)
 
$
264

 
$
(1
)
 
$
4,029

 
$
(80
)
 
$
4,305

 
$
(290
)
 
$
4,015

Potential recoveries (3)
(465
)
 
23

 
(81
)
 
—

 
(2,542
)
 
55

 
$
(3,010
)
 
192

 
(2,818
)
Subtotal
(367
)
 
18

 
183

 
(1
)
 
1,487

 
(25
)
 
1,295

 
(98
)
 
1,197

Discount
83

 
(5
)
 
(53
)
 
—

 
(134
)
 
(2
)
 
(111
)
 
23

 
(88
)
Present value of expected cash flows
$
(284
)
 
$
13

 
$
130

 
$
(1
)
 
$
1,353

 
$
(27
)
 
$
1,184

 
$
(75
)
 
$
1,109

Deferred premium revenue
$
125

 
$
(4
)
 
$
151

 
$
—

 
$
518

 
$
(2
)
 
$
788

 
$
(64
)
 
$
724

Reserves (salvage)
$
(311
)
 
$
15

 
$
48

 
$
(1
)
 
$
993

 
$
(24
)
 
$
720

 
$
(47
)
 
$
673

Financial Guaranty Insurance
BIG Transaction Loss Summary
As of December 31, 2017
 
 
BIG Categories
 
BIG 1
 
BIG 2
 
BIG 3
 
Total
BIG, Net
 
Effect of
Consolidating
FG VIEs
 
Total
 
Gross
 
Ceded
 
Gross
 
Ceded
 
Gross
 
Ceded
 
 
(dollars in millions)
Number of risks (1)
139

 
(22
)
 
46

 
(3
)
 
150

 
(41
)
 
335

 
—

 
335

Remaining weighted-average contract period (in years)
8.9

 
7.3

 
14.0

 
2.9

 
9.6

 
9.3

 
9.9

 
—

 
9.9

Outstanding exposure:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Principal
$
4,397

 
$
(96
)
 
$
1,352

 
$
(8
)
 
$
6,445

 
$
(190
)
 
$
11,900

 
$
—

 
$
11,900

Interest
2,110

 
(42
)
 
1,002

 
(1
)
 
3,098

 
(86
)
 
6,081

 
—

 
6,081

Total (2)
$
6,507

 
$
(138
)
 
$
2,354

 
$
(9
)
 
$
9,543

 
$
(276
)
 
$
17,981

 
$
—

 
$
17,981

Expected cash outflows (inflows)
$
186

 
$
(5
)
 
$
492

 
$
(1
)
 
$
3,785

 
$
(104
)
 
$
4,353

 
$
(307
)
 
$
4,046

Potential recoveries (3)
(595
)
 
20

 
(145
)
 
—

 
(2,273
)
 
67

 
(2,926
)
 
194

 
(2,732
)
Subtotal
(409
)
 
15

 
347

 
(1
)
 
1,512

 
(37
)
 
1,427

 
(113
)
 
1,314

Discount
66

 
(4
)
 
(93
)
 
—

 
(78
)
 
(2
)
 
(111
)
 
23

 
(88
)
Present value of expected cash flows
$
(343
)
 
$
11


$
254

 
$
(1
)
 
$
1,434

 
$
(39
)
 
$
1,316

 
$
(90
)
 
$
1,226

Deferred premium revenue
$
112

 
$
(5
)
 
$
129

 
$
—

 
$
540

 
$
(6
)
 
$
770

 
$
(74
)
 
$
696

Reserves (salvage)
$
(380
)
 
$
11

 
$
202

 
$
(1
)
 
$
1,100

 
$
(34
)
 
$
898

 
$
(55
)
 
$
843

____________________
(1)
A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments. The ceded number of risks represents the number of risks for which the Company ceded a portion of its exposure.

(2)
Includes BIG amounts related to FG VIEs.

(3)
Represents expected inflows for future payments by obligors pursuant to restructuring agreements, settlement or litigation judgments, excess spread on any underlying collateral and other estimated recoveries.